GB: Retail Sales

Thu Sep 17 03:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.1% 0.2% 0.1%
Year over Year 3.8% 3.7% 4.2% 4.1%

High street spending performed much as expected in August. Overall volume sales were up a modest 0.2 percent following an unrevised 0.1 percent increase in July while excluding auto fuel they edged 0.1 percent firmer after a marginally smaller revised 0.3 percent gain last time. Compared with a year ago total sales growth was 3.7 percent, a 0.4 percentage point drop versus July, and non-auto fuel purchases declined from 4.1 percent to a 3.5 percent rate.

However, the sluggish gain shown in the headline data masked a much stronger period for underlying demand. Hence, while food purchases fell a further 0.9 percent on the month, their third consecutive decline, excluding auto fuel non-food sales were up a solid 1.2 percent, their sharpest rise since April. Within this, textiles, clothing and footwear saw a 2.3 percent bounce and the other stores category a 5.4 percent surge. Even so, growth lacked balance and there were falls in non-specialised stores (1.6 percent), household goods (3.4 percent) and non-store retailing (1.5 percent). Auto fuel purchases increased 1.3 percent.

The latest data put total retail sales in the three months to August 0.4 percent above the previous period, a tick down from their July rate and 3 ticks short of June's pace. The comparable measure excluding auto fuel was also 0.4 percent firmer after a 0.7 percent increase last time. By and large consumer fundamentals remain healthy enough but households have clearly become more cautious in their spending habits.

For the BoE MPC, today's report does nothing to increase pressure for a near-term hike in Bank Rate. In fact, with the retail sales deflator falling even further into negative territory (minus 3.3 percent annual rate from minus 2.9 percent in July), a monetary tightening looks all the more difficult to justify.

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.