GB: Retail Sales

Thu Nov 16 03:30:00 CST 2017

Consensus Actual Previous Revised
Month over Month 0.1% 0.3% -0.8% -0.7%
Year over Year -0.6% -0.3% 1.2% 1.3%

Retailers had a slightly better than expected October. Following a marginally smaller revised 0.7 fall in September, volume sales rebounded 0.3 percent. However, annual growth still slid from 1.3 percent to minus 0.3 percent, the first sub-zero rate since March 2013.

Excluding auto fuel, purchases rose a smaller 0.1 percent versus August and were also 0.3 percent weaker than in October 2016.

The monthly headline change was mainly due to non-food stores which rose 0.8 percent and contributed 0.4 percentage points. Petrol stations (0.2 percentage points) also provided a boost but there was a hefty drop in textile and clothing (1.5 percent). Food and non-store retailing also subtracted.

Inflation news was a little softer. The overall deflator rose 0.2 percent on the month which was small enough to reduce its yearly rate from 3.3 percent to 3.1 percent, the first decline since April. However, excluding auto fuel, the annual rate was only flat at 3.0 percent.

Mainly thanks to a strong August, the October report puts total sales volumes over the latest three months 0.9 percent above their level in May-July. Excluding auto fuel, purchases were up 1.1 percent. This suggests that there is still life in the consumer sector despite anecdotal evidence of a potentially sharp slowdown to come. Even so, retailers will certainly not be taking the key Christmas holiday period for granted.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.