GB: CBI Distributive Trades

September 27, 2016 05:00 CDT

Consensus Actual Previous
Level 5 -8 9

The CBI's latest survey of high street spending suggests that September was an unexpectedly poor month for UK retailers. At minus 8 percent, the balance of respondents reporting higher volume sales than a year ago was down some 17 percentage points versus its August reading and also comfortably short of the CBI's 3 percent forecast made last month. However, the September print was still stronger than July's minus 14 percent outturn.

Sales for the time of year, normally regarded as a better guide to the underlying position, weighed in at a comfortable enough 7 percent, but the stocks/demand index remained potentially dangerously high at 20 percent, down just 1 percentage point from August. The volume of orders placed with suppliers (minus 8 percent) was also low.

Still, retailers are cautiously optimistic about October (forecast sales balance 7 percent) and the CBI attributed at least part of the recent volatility to weather effects. Nonetheless, overall the signs are that retail sales, which rebounded strongly in July after a poor June, may be starting to slow on a trend basis. That said, the correlation between the survey and hard data has not been particularly strong of late.

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