GB: CBI Distributive Trades

March 23, 2017 06:00 CDT

Consensus Actual Previous
Level 4 9 9

Having successfully called the rebound in retail sales in February (see today's calendar entry), the CBI's latest Distributive Trades Survey suggests a more subdued, but still stronger than expected, period in March.

The balance of respondents reporting higher volume sales on the year held steady at a respectable 9 percent. However, since actual retail sales fell 0.4 percent on the month in March 2016, strictly speaking the flat reading here should imply a relatively soft month for purchases. Sales for the time of year, a key indicator of underlying trends, were slightly below the seasonal norm and orders placed with suppliers fell again. Retailers' profit margins also continue to be squeezed by rising costs and intense competition in the domestic market.

Nonetheless, while expecting consumer spending to slow over the course of the year as higher inflation erodes real disposable incomes, the CBI anticipates an improvement in April when its sales index is forecast to climb to 15 percent.

Overall the results indicate a still reasonably robust consumer sector, at least for now. Nonetheless, the outlook remains very uncertain.

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