GB: Retail Sales

Thu Jun 18 03:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month -0.3% 0.2% 1.2% 0.9%
Year over Year 4.5% 4.6% 4.7% 4.6%

Retail sales surprisingly expanded in May. However, a 0.2 percent monthly increase only followed a downwardly revised 0.9 percent gain in April so that annual growth of 4.6 percent was much as expected.

Excluding auto fuel, purchases were also up 0.2 percent versus the start of the quarter and 4.4 percent higher on the year, a couple of ticks short of the April pace.

May's monthly rise was dominated by the food sector where sales were up a solid 0.6 percent. By contrast, excluding auto fuel, non-food demand dipped 0.1 percent. Within this latter sector, clothing and footwear fell 1.6 percent and non-store retailing was off 0.1 percent. However, household goods jumped 1.0 percent and the other stores category rose 0.4 percent. Auto fuel sales were 0.3 percent firmer.

Prices were up versus April with the overall deflator advancing 0.4 percent on the month and the ex-auto fuel gauge 0.3 percent higher. Even so, annual inflation rates remained solidly in negative territory at minus 2.7 percent and minus 1.8 percent respectively.

May's data make for an increase in total volumes over the last three months of 0.6 percent, the twenty-seventh consecutive month of positive growth and the longest sustained period of rising purchases on record. Average sales in April/May were 0.8 percent above their mean in the first quarter when they increased 0.9 percent.

Consequently, with most surveys indicating a still high level of consumer confidence it looks very likely that the household sector will continue to provide a major impetus to economic growth this quarter.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.