GB: Retail Sales

Thu Dec 14 03:30:00 CST 2017

Consensus Actual Previous Revised
Month over Month 0.4% 1.1% 0.3% 0.5%
Year over Year 0.3% 1.6% -0.3% 0.0%

Retailers has a surprisingly strong November. Sales volumes rose a significantly larger than expected 1.1 percent on the month, equalling their best performance since October last year and that after a useful positive revision to the October outturn. Annual growth of purchases was 1.6 percent, up from 0.0 percent last time.

Excluding auto fuel, the picture was much the same with a 1.2 percent monthly gain that lifted yearly growth from 0.0 percent to 1.5 percent.

Promisingly, November's impressive monthly advance was led by non-food demand which, excluding auto fuel, saw a solid 1.5 percent spurt. Within this, household goods were fully 2.9 percent firmer and non-store retailing up 2.6 percent, in part it seems due to a successful 'Black Friday'. The other stores category also climbed 1.2 percent as did clothing and textiles while non-specialised stores gained 0.3 percent. With food sales rising 0.6 percent and auto fuel 0.3 percent higher, November's strength was reassuringly broad-based.

Inflation developments were neutral with both the overall sales deflator and the ex-auto fuel index posting unchanged annual inflation rates of 3.1 percent and 3.0 percent respectively.

Retail sales have been very erratic in recent months but a solid uptrend is clear enough. The latest three months show a 0.8 percent increase versus June-August with the non-auto fuel rate a tick firmer at 0.9 percent. Such figures suggest that an apparent sharp decline in consumer confidence has yet to feed through to actual household spending. The BoE MPC will be all the more convinced that November's hike in Bank Rate was appropriate and without a slowdown in consumer demand, the hawks may even be gunning for another monetary tightening sooner than expected next year.

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.