GB: Retail Sales

Thu Mar 24 04:30:00 CDT 2016

Consensus Actual Previous Revised
Month over Month -1.0% -0.4% 2.3%
Year over Year 3.4% 3.8% 5.2% 5.4%

Following their unexpected (and unrevised) 2.3 percent surge in January, retail sales gave back some ground with a smaller than expected 0.4 percent monthly fall in February. With sales particularly strong a year ago, annual growth of volumes dropped from 5.4 percent to 3.8 percent.

Excluding auto fuel, purchases were only 0.2 percent below their January level and 4.1 percent higher than in February 2015, just a tick short of the rate last time.

The modest monthly decline in total sales was evenly split between the food and (ex-auto fuel) non-food sectors, both of which decreased 0.3 percent. Within the latter the steepest fall was in the other stores category (0.6 percent) ahead of clothing and footwear (0.4 percent) and non-specialised stores (0.3 percent). The only increase of note was in household goods (1.4 percent). Auto fuel was down 2.4 percent.

Prices were again weak. Hence, the annual change in the overall sales deflator was still deep into negative territory at minus 2.5 percent, albeit a couple of ticks up on the January rate. The comparable ex-auto fuel rate was minus 2.1 percent, unchanged from last time.

Despite February's setback average total sales volumes in the first two months of the quarter were still a healthy 1.6 percent above their mean level in October-December. This means that without a marked decline this month retail sales will make a useful contribution to first quarter real GDP growth. Still, with retail price inflation so far short of the CPI's 2 percent target, apparently buoyant consumption should have little impact upon BoE policy for some time yet.

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.