GB: CBI Distributive Trades

October 27, 2016 05:00 CDT

Consensus Actual Previous
Level -2 21 -8

The CBI's October Distributive Trades Survey was surprisingly upbeat. At 21 percent, up from minus 8 percent in September, the balance of retailers signalling a rise in volume sales from a year ago was much stronger than expected and at its highest level since September 2015.

Actual sales fell 0.6 percent on the month in October 2015 so some increase in the CBI's annual growth measure was only to be expected. However, this latest jump suggests that consumers were out in some force. Indeed, while the monthly CBI data are very volatile, even the 3-month moving average gained fully 11 percentage points to 7 percent. Clothing and footwear, furniture and carpets and hardware and DIY stores were particularly robust.

The forecast index for mid-quarter was also 21 percent which, if even roughly accurate, would imply another very good month for retailers as actual volumes increased a monthly 1.4 percent in November last year. Coming hard on the heels of an unexpectedly upbeat third quarter GDP report (see today's calendar entry), the CBI's latest findings should further dampen any talk of additional BoE easing at next week's MPC meeting.

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