GB: CBI Distributive Trades

Tue May 26 05:00:00 CDT 2015

Consensus Actual Previous
Level 18 51 12

The CBI's new Distributive Trades survey suggests that high street spending was remarkably buoyant in May. At some 51 percent the balance of retailers reporting an increase in volumes versus a year ago was up fully 39 percentage points from its April reading and at its highest level since last December. It was also even stronger than the 40 percent forecast made by the CBI last month.

Sales for the time of year, normally seen as a useful guide to underlying trends, climbed 31 percentage points to 30 percent while orders gained 37 percentage points to 29 percent, their strongest mark since December 2010. Additionally, retailers are even more optimistic about prospects for June with the forecast index for quarter-end weighing in 58 percent, its highest reading since September 1988.

Actual sales in May 2014 were essentially flat on the month so the surge in the CBI's annual growth measure should equate with a hefty monthly rise in the ONS index. That said, as the divergence in April underscored, the monthly correlation between actual and the CBI's take on sales is poor on a short-term basis so care is needed in interpreting today's report. Nonetheless, the findings are consistent with other signs of a generally robust consumer sector. However, until rising household spending translates into a sustained pick-up in inflation, the BoE is unlikely to be shaken from its steady interest rate stance.

This survey was first introduced in 1983 and is an indicator of short-term trends in the UK retail and wholesale distribution sector. The quarterly and monthly surveys both cover volume of sales, orders on suppliers, sales for the time of year and stocks, while the quarterly survey also covers imports, selling prices, numbers employed, investment and business situation. Both monthly and quarterly surveys now contain questions on current and expected internet sales and average prices for internet goods.

This survey is a leading indicator of consumer spending because retailer and wholesaler sales are directly influenced by consumer buying levels. The monthly update provides a vital update on volume of sales, orders and stocks. Like the industrial survey, it carries significant weight in the formulation of economic policy at the Bank of England and within government as a highly respected barometer of high street trade. It is considered to be an advance indicator of retail sales although it is not well correlated with the official data on a monthly basis.

Monthly and quarterly