GB: CBI Distributive Trades

Thu Jul 27 05:00:00 CDT 2017

Consensus Actual Previous
Level 9 22 12

The CBI's new Distributive Trades Survey points to a surprisingly strong month for high street sales. At 22 percent, the balance of respondents reporting an increase in volume sales from a year ago was up 10
percentage points from June's outturn and much higher than expected.

The rise in the headline index also needs to be seen in the context of an unusually sharp 1.8 percent monthly bounce in actual sales in July 2016 and this will have made for some downside bias to today's result. The CBI attributed some of the buoyancy to seasonally warm weather but, even allowing for this, the results are impressive.

Most indicators of consumer confidence have shown a clear deterioration in recent months, notably in June when the GfK measure saw its lowest level since July last year in the aftermath of the Brexit vote. Today's CBI report argues otherwise and makes the near-term outlook for household spending all the more uncertain. The BoE MPC's hawks will feel vindicated in their call for a hike in interest rates.

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