| Consensus | Actual | Previous | |
|---|---|---|---|
| Sales Balance | -40% | 8% | -44% |
Highlights
The May survey was much stronger than expected. The headline index was up from April's surprisingly weak minus 44 percent at 8 percent, some 48 percentage points above the market consensus and its best reading since December 2022. Actual sales dipped a monthly 0.2 percent in May 2023 and so made for some upside risk but taken at face value this month's bounce bodes well for the retail sector.
That said, the CBI's forecast index for June was only minus 4 percent and while sales for the time of year (2 percent) hit an 8-month high, this was only in line with the seasonal norm. Moreover, orders placed with suppliers (minus 11 percent) declined again, albeit at a slower pace than in April. Of note too, expected selling prices (20 percent) eased to their lowest level since August 2022 and were back below their long-run average.
In sum, today's report suggests that while conditions in the retail sector are improving, they are doing so only slowly. The May data put the UK RPI at minus 19 and the RPI-P at minus 35 meaning that overall economic activity is still running cooler than market expectations.
That said, the CBI's forecast index for June was only minus 4 percent and while sales for the time of year (2 percent) hit an 8-month high, this was only in line with the seasonal norm. Moreover, orders placed with suppliers (minus 11 percent) declined again, albeit at a slower pace than in April. Of note too, expected selling prices (20 percent) eased to their lowest level since August 2022 and were back below their long-run average.
In sum, today's report suggests that while conditions in the retail sector are improving, they are doing so only slowly. The May data put the UK RPI at minus 19 and the RPI-P at minus 35 meaning that overall economic activity is still running cooler than market expectations.
Market Consensus Before Announcement
The headline sales balance is expected to rise from a lowly minus 44 percent in April to minus 40 percent in May.
Definition
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.
Description
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.
