GB: CBI Distributive Trades

Wed Sep 27 05:00:00 CDT 2017

Consensus Actual Previous
Level 5 42 -10

The CBI's latest Distributive Trades Survey signalled a surprisingly strong September for the retail sector with the balance of respondents reporting a yearly rise in volume sales climbing some 52 percentage points to 42 percent. The outturn was much higher than expected and, indeed, its strongest reading in two years.

Actual retail sales were roughly flat in September 2016 so the jump in the CBI's annual growth yardstick should equate with a very solid monthly increase this time around. The CBI's forecast index for October was 23 percent, but this will have been biased down by a near-2 percent monthly surge in sales in October last year. The rest of the survey was equally robust and included sharp rebounds in both reported orders (12 percent) and expected orders (7 percent).

The survey was far too pessimistic about actual retail sales in August which rose an unexpectedly large 1 percent on the month. September's results clearly point to a pick-up and, while this may be partly a timing issue, the overall tone is very optimistic. Indeed, with an average reading of 18 percent over the last three months the CBI's measure still suggests that the current squeeze on the consumer sector is having only a limited impact. At least so far. If borne out in the actual spending data, pressure for a BoE rate hike will continue to build and the focus on November's MPC meeting will become all the more intense.

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