GB: CBI Distributive Trades

Tue Jun 27 05:00:00 CDT 2017

Consensus Actual Previous
Level 2 12 2

The CBI's latest Distributive Trades Survey points to a rebound in high street spending in June. At a surprisingly firm 12 percent, the balance of respondents reporting positive annual growth of volumes was up a sizeable 10 percentage points from May and at its second highest level so far in 2017.

However, the apparent jump in the measure needs to be seen in the light of a 1.3 percent monthly decline in actual sales in June 2016. This will have provided significant upside bias to today's outcome. Indeed, caution about the result was reflected in the CBI's forecast for July which weighed in at just 3 percent. The organisation also emphasised that life is getting tougher for retailers and noted that sales for the time of year were only broadly in line with seasonal norms.

Still, amidst increasing talk of a consumer slowdown, the report should at least be seen as cautiously reassuring. Nonetheless, it is unlikely to provide the BoE MPC's hawks with much additional ammunition.

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