GB: CBI Distributive Trades

May 23, 2017 05:00 CDT

Consensus Actual Previous
Level 12 2 38

The CBI's new Distributive Trades Survey points to a sharp deceleration in retail sales growth this month. At just 2 percent, the balance of respondents signalling a rise in volumes from a year ago was some 30 percentage points short of its April reading and comfortably below market expectations. This was also the second sharpest drop in the headline index since February 2015.

However, May's results need to be seen in the context of a surge in purchases in April which clearly benefitted significantly from the Easter holidays. Moreover, actual sales were up an unusually large 1.6 percent on the month in May 2016 which automatically biases down this month's annual growth rate. The CBI forecasts its sales balance to move up to 6 percent in June, although this would still be short of its average reading (10 percent) so far this year.

Following a weak first quarter and exceptional strength in April, it is particularly difficult to gauge the underlying trend in retail sales. It is probably up, but a clearer picture of just how fast will need at least the official May data if not June as well.

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