GB: Retail Sales

Fri Feb 16 03:30:00 CST 2018

Consensus Actual Previous Revised
Month over Month 0.5% 0.1% -1.5% -1.4%
Year over Year 2.4% 1.6% 1.4% 1.5%

Retail sales were soft in January. Overall volumes edged just 0.1 percent firmer on the month, barely denting a marginally smaller revised 1.4 percent drop in December. Annual growth was 1.6 percent, up a tick from last time.

Excluding auto fuel, the picture was much the same with a 0.1 percent monthly gain and a 1.5 percent yearly rate.

However, the minimal monthly headline rise was held in check by a 0.4 percent decline in food purchases and masked a respectable 0.7 percent increase in (ex-auto fuel) non-food demand. Within this, the other stores category (2.1 percent) was especially strong and non-specialised stores (0.5 percent) also had a decent period. Even so, there were modest setbacks in textiles, clothing and footwear (minus 0.1 percent) and household goods (minus 0.6 percent). Auto fuel (minus 0.6 percent) similarly weighed.

Inflation developments were somewhat less restrictive. Hence, the annual change in both the total and ex-auto fuel deflators weighed in at 2.8 percent, the former down 0.3 percentage points from December and the latter off 0.1 percentage points. This was the second consecutive drop in the non-fuel gauge.

Seasonally adjusting the retail sales data around the turn of the year has always been difficult and has been complicated further by the arrival of Black Monday which has significantly impacted the November/December profile. This means that recent outturns need to be viewed with extra caution. January's limp start to 2018 made for a 0.1 percent 3-monthly increase in both overall and ex-auto fuel sales. While at least positive, these were the weakest performances in more than half a year and warn that consumer spending may be responding to the ongoing squeeze on household budgets. If so, there is even more reason for supposing that probable BoE tightening over coming quarters will be only gradual and limited.

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.