GB: CBI Distributive Trades

August 25, 2016 05:00 CDT

Consensus Actual Previous
Level 5.0 9 -14

August high street sales rebounded more strongly than expected from their July post-Brexit collapse according to the CBI's distributive trades survey. At 9 percent, the balance of retailers reporting an increase in sales volume versus a year ago was up 24 percentage points from the July reading of minus 14 percent, beating their own July expectations of a minus 12 percent reading in August by a very wide margin.

On balance, retailers reported sales volumes growing versus the year ago levels in clothing (39 percent) and in non-store goods (66 percent), while grocers reported relatively flat sales (3 percent). On balance growth in internet sales accelerated (42 percent) for the year to August, up from 23 percent in July.

Retailer order placements with suppliers were nevertheless down on the year according to the survey, with retailers reporting placing smaller order volumes with suppliers than last year outnumbering those reporting higher order volumes by 7 percent. And for the first time since November 2015, retailers reported lower average selling prices on balance (minus 5 percent). Looking ahead, retailers expecting higher sales volumes next month compared to a year ago outnumbered those expecting lower volumes by 3 percent.

Business conditions were even rosier on the wholesale front, where the number of wholesalers reporting higher sales volumes outnumbered those reporting lower sales by 22 percent. And motor vehicle dealers had it best of all, as 30 percent reported sales volume up on a year ago, while 0 percent said sales were down.

Today's survey shows UK retailers in much better shape than even they themselves expected they would be in following the Brexit fallout, just as the industrial trends survey released by the CBI earlier this week showed UK industry in rather surprisingly good condition. Ironically, at least according to surveys, which it must be remembered are not hard data, while the UK economy appears to be brushing Brexit off, recent business sentiment surveys in Europe (see today's French business climate indicator and German IFO survey) suggest that negative Brexit effects are somehow being played out there more acutely.

The Confederation of British Industry (CBI) produces a monthly survey (and a more detailed quarterly report) analysing the performance of the UK retail, wholesale and motor trade sector. Volume sales, orders on suppliers, sales for the time of year and stocks are all covered and the quarterly survey also covers imports, selling prices, numbers employed, investment and business situation. Financial markets tend to concentrate on the CBI's annual sales growth measure as a leading indicator of the official retail sales report.

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