GB: CBI Distributive Trades

Thu Oct 26 05:00:00 CDT 2017

Consensus Actual Previous
Level 14 -36 42

The CBI's October Distributive Trades Survey paints a decidedly less upbeat picture of high street spending than last month. At minus 36 percent, the headline annual growth measure was down a massive 78 percentage points from September's 2-year high and at its lowest level since March 2009.

Actual retail sales jumped a monthly 1.9 percent in October 2016 so there was always downside bias to today's results but the magnitude of the drop was much sharper than expected. Indeed, at minus 43 percent, new orders placed with suppliers similarly saw their sharpest contraction in more than eight years and, at minus 7 percent, are expected to decline still further in November.

The CBI is forecasting a reading of 3 percent for its headline index next month, suggesting a modest recovery in what should be a key month ahead of the Christmas break. The monthly data can be erratic and have been especially so of late but the October results still ought to raise few eyebrows at next week's BoE MPC meeting. A monetary tightening may be on the cards but the Committee's doves could yet get their way.

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