GB: CBI Distributive Trades

January 26, 2017 05:00 CST

Consensus Actual Previous
Level 22 -8 35

High street spending was unexpectedly soft in January if the CBI's new Distributive Trades survey is anything to go by. At minus 8 percent, the balance of businesses reporting higher volume sales on the year was down some 43 percentage points from its December reading and at its weakest level since July.

However, the fall in the CBI's measure needs to be seen in the context of a particularly strong period in January 2016 when actual sales rose fully 1.8 percent on the month. Some decrease was almost inevitable. In fact, volumes were considered to be broadly in line with the average for the time of year and outside of food, which saw a sizeable decline, healthy growth was reported elsewhere, particularly among clothing retailers and department stores. Moreover, the CBI also expects a return to positive growth in February when it sees its index rebounding to 13 percent.

Actual retail sales slumped in December (down a monthly 1.9 percent) but this still left solid underlying trend and fourth quarter purchases were up 1.3 percent versus the previous period. Today's findings suggest January will be relatively sluggish but that discretionary spending is probably holding up quite well. Overall, the household sector still seems to be doing OK but February will need to see some improvement or doubts will inevitably rise about the sustainability of the spending uptrend.

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