GB: Retail Sales

Thu Sep 15 03:30:00 CDT 2016

Consensus Actual Previous Revised
Month over Month -0.4% -0.2% 1.4% 1.9%
Year over Year 5.4% 6.2% 5.9% 6.3%

Following their surprise surge in July (now revised even stronger) retail sales fell back in August. However, a 0.2 percent monthly decline only slightly dented the previous period's 1.9 percent bounce and was only half the anticipated fall. As a result, annual growth of volumes was down just a tick at a still very healthy 6.2 percent.

Excluding auto fuel, the picture was much the same with a 0.3 percent monthly drop reversing just a fraction of July's upwardly revised 2.1 percent leap. Compared with a year ago, purchases expanded 5.9 percent after a 5.8 percent gain last time.

The monthly fall would have been steeper but for a second successive 0.7 percent advance in sales of food but a sizeable 1.9 percent decline in non-food purchases needs to be seen in the context of a 3.7 percent jump in July. Within this latter group, clothing and footwear (minus 3.4 percent) was probably hit by seasonally very warm weather but a 5.3 percent nosedive in household goods is harder to explain away. That said, non-specialised stores posted a 0.8 percent rise, non-store retailing was up some 2.7 percent and the other stores category recorded just a 0.1 percent dip. Auto fuel sales were 0.6 percent firmer.

Prices were up on the month but a 0.2 percent increase failed to offset July's 0.7 percent decline and the yearly change in the sales deflator was just 0.1 percentage points higher at minus 1.9 percent.

August's minor setback leaves overall retail sales in the latest three months up 1.6 percent, a 0.4 percentage point decline versus the July print but still equalling the second strongest reading since September-November 2015. Excluding auto fuel, growth was 1.7 percent, down from 2.1 percent last time. Anyone expecting an early collapse in household spending as a result of the Brexit vote has been proved to be very wide of the mark and today's report should all but guarantee a steady policy announcement from the BoE today.

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. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

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.