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GB: CBI Distributive Trades
| Actual | Previous | |
| Sales Balance | -43% | -17% |
Highlights
The latest survey from the Confederation of British Industry (CBI) suggests that the retail sector is struggling against cyclical and structural headwinds. February's sharp deterioration in retail sales volumes (minus 43 percent, from minus 17 percent in January) suggests that weak demand has deepened rather than stabilised. While adverse weather provided an immediate drag on footfall, the persistence of negative balances since mid-2023 indicates a more entrenched consumption slowdown.
Retailers' expectations remain notably pessimistic, with business sentiment at one of its weakest points in 17 years (minus 34 percent). This forward-looking gloom is translating into defensive behaviour since capital expenditure intentions are deeply negative (minus 46 percent) and employment is contracting at its fastest pace since May 2023 (minus 40 percent), with further cuts anticipated. Such retrenchment risks reinforcing the downturn through weaker labour income and subdued investment.
There are, however, early signs of rebalancing. The pace of decline in overall and supplier orders is expected to moderate next month, and online sales have rebounded strongly (43 percent), signalling continued channel shift rather than outright collapse in demand. Price growth remains aligned with the long-run average (41 percent), suggesting margin preservation rather than aggressive discounting. indeed, the sector appears to be adjusting capacity to softer demand while awaiting clearer policy support and improved consumer confidence.
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.