GB: CBI Distributive Trades

December 20, 2016 05:00 CST

Consensus Actual Previous
Level 20 35 26

The CBI's December Trades Survey suggests strong retail sales in the key Christmas shopping period. The annual growth measure weighed in at some 35 percent, up 9 percentage points versus its already robust November reading, comfortably exceeding market expectations and the highest level since September last year.

Actual sales slumped 1.2 percent in December 2015 so even a flat monthly performance this year should have equated with a rise in the CBI index but the December outturn is still impressive. That said, and not for the first time, the buoyancy of the current data is tinged by caution concerning the outlook. Hence, the CBI's forecast index shows what would be a hefty 17 percentage point decline to 18 percent in January. In addition, orders, which rose 6 percentage points to 12 percent, are seen falling to minus 2 percent next month.

Nonetheless, if the CBI's December view is anything like accurate, retail sales expanded sharply at year-end and should provide a more than useful lift to fourth quarter real GDP growth.

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