GB: CBI Distributive Trades

Thu Mar 24 06:00:00 CDT 2016

Consensus Actual Previous
Level 15 7 10

Superficially at least, the CBI's latest Distributive Trades Survey suggests no real improvement for the retail sector in March. The balance of respondents reporting higher volumes versus a year ago was 7 percent, down from 10 percent in February and short of market expectations. However, it did beat the CBI's own forecast made last month (2 percent).

In fact, sales for the time of year, a key guide to underlying developments, were viewed as average and expectations were relatively positive. Hence, the headline index is seen rebounding to 17 percent in April and expected orders, which saw their lowest reading (minus 12 percent) since June 2013, were put some 18 percentage points higher at 6 percent.

Actual sales fell a monthly 0.7 percent in March last year so, taken at face value, the decline in the CBI's measure should equate with a sizeable drop in the current period. However, the short-term correlation is poor and in general retailers seem to be cautiously upbeat. Consumer spending rose 0.7 percent last quarter and was largely responsible for a 0.5 percent quarterly gain in real GDP. Accordingly, with softening global demand, sustained momentum here will be vital to keeping the economic recovery on track.

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