GB: CBI Distributive Trades

Wed Apr 27 05:00:00 CDT 2016

Consensus Actual Previous
Level 12 -13 7

The CBI's latest Distributive Trades Survey suggests that retailers had a very poor April. The balance of respondents reporting higher volume sales versus a year ago slumped from March's 7 percent to minus 15 percent, well short of both market expectations and the CB's own forecast made last month. It was also the weakest outturn since January 2012.

Actual retail sales rose 0.7 percent on the month a year ago so some drop in the CBI's index was always a possibility. However, the size of the decline warns that April was genuinely disappointing. The monthly data can be erratic, particularly around Easter time, but the 3-month moving average, the best guide to underlying developments, was also sharply lower. This dropped some 10 percentage points to 1 percent, its worst print since June 2013. Cold weather may have been a factor but seems unlikely to offer a full explanation.

Retailers are more optimistic about May and forecast the headline index to rebound to 9 percent. However, as today's results make plain, their projections can be very wide of the mark. Retail sales are not a good leading indicator of consumption but this report provides early reason for supposing that the slowdown in first quarter real GDP growth (see today's calendar entry) could be furthered in the current period.

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