GB: CBI Distributive Trades

Tue Sep 29 05:00:00 CDT 2015

Consensus Actual Previous
Level 28 49 24

The CBI's September Distributive Trades Survey signalled a very positive month for the UK high street. At 49 percent, up sharply from 24 percent in August, the balance of retailers reporting stronger volume sales than a year ago was comfortably above the 35 percent mark forecast by the CBI last month and even further above the market consensus.

Actual sales fell a hefty 0.8 percent on the month in September 2014 so there was always going to be some upside bias to today's headline data. However, with reported orders (30 percent after 2 percent) at their highest level since December 2010 and expected to see their best reading since October 1987 next month, the survey looks robust all round. Against this backdrop it is hardly surprising that the CBI is looking for the sales balance to edge a couple of percentage points higher to 51 percent in October. If right, this would equal the 2015 peak seen back in May.

The CBI attributed the buoyancy of today's results to a combination of low inflation (0.0 percent in August) and accelerating wages. However, businesses remain very cautious about increasing prices too quickly for fear of losing market share. Accordingly, it still looks as if a sustained period of healthy retail sales growth is needed if inflation is to receive any real boost.

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