January's CBI distributive trades survey was surprisingly poor. The headline sales balance dropped fully 34 percentage points to minus 23 percent, more than reversing December's jump and well short of the market consensus. However, it was close to the CBI's own forecast (minus 21 percent). This was the worst reading since April last year and with actual sales dipping 0.3 percent on the month in January 2022, should imply a particularly weak period for consumer demand. Looking ahead, the CBI's February forecast (minus 15 percent) shows another decline, although at a somewhat slower rate.

All that said, sales for the time of year (minus 3 percent) were unchanged from December and so broadly typical for January. A similar outturn (minus 2 percent) is anticipated next month. Even so, orders placed with suppliers (minus 32 percent after minus 21 percent) were sharply lower and are expected to fall again in February (minus 19 percent). In addition, stocks were again seen as too high relative to sales (23 percent after 16 percent) and by more than last month.

December's survey was overly optimistic about sales at year-end so today's findings are no guarantee of weakness this month. Still, the January results are poor enough to push both the ECDI (minus 40) and ECDI-P (minus 47) further into negative surprise territory, warning that a probable fall in overall economic activity this month could be steeper than currently anticipated.

The sales balance is seen sliding from 11 percent in December to minus 5 percent this month.

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.