Global| Dec 15 2010Deck The Halls With Boughs Of Optimism? UK CBI Surveys Shows Upward Momentum, Then...
Summary
The distributive trades industry, a key intermediary sector, is showing upward momentum. Sales are up to a +21 net diffusion reading after slackening over two months. Orders rose sharply in the month also after a two month lull. Sales [...]
The distributive trades industry, a key intermediary sector, is showing upward momentum. Sales are up to a +21 net diffusion reading after slackening over two months. Orders rose sharply in the month also after a two month lull. Sales for 'this time of year,' a seasonally adjusted concept, are at an eye catching minus 3 reading which is down from its cycle high and not a very good showing for December a key selling season. Last December this reading was minus 21 and the year before minus 52 but in December of 2007 the reading was a plus 4. We have to go back to Dec of 2006 to get a solid positive reading; that one was plus 27. By recent standards the minus three is not so bad, but it's not so good either.
The bad news is in the expected sales and orders series as well as in the expected sales for 'time of year.' These responses, chronicled in the table, show that merchants are expecting things to begin to cool (see orders and 'sales for time of year'). In the new year the UK austerity measures will bite with full force and, despite an improved holiday selling season, merchants are wary. We could see the UK data drop off sharply in the New Year as everyone braces for the full impact of austerity.
The retail survey from the CBI has moved up very sharply and steadily too (see chart). Forward looking sales and orders are however holding up a bit better for retailing than for the distributive trades. This an interesting disconnection. As we move into 2011 it will be interesting to see how much the New Year and its new policies will be disrupted by the new policies as those in the distributive trades fear, or if the momentum can carry the economy though this period of transition as retailers seem to think.
| UK Distributive volume data CBI Survey | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Reported: | Jan'11 | Dec'10 | Nov'10 | Oct'10 | 12Mo Avg | Pcntle | Max | Min | Range |
| Sales/Yr Ago | 21 | 20 | 18 | 12 | 77% | 49 | -74 | 123 | |
| Orders/Yr Ago | 20 | 10 | 4 | 6 | 78% | 42 | -59 | 101 | |
| Sales:Time/Yr | 9 | 2 | 13 | -7 | 74% | 32 | -57 | 89 | |
| Stocks:Sales | 9 | 13 | 23 | 13 | 32% | 34 | -3 | 37 | |
| Expected: | Jan'11 | Dec'10 | Nov'10 | Oct'10 | 12Mo Avg | Pcntle | Max | Min | Range |
| Sales/Yr Ago | 19 | 14 | 21 | 27 | 13 | 84% | 33 | -55 | 88 |
| Orders/Yr Ago | 9 | 11 | 10 | 25 | 7 | 79% | 26 | -56 | 82 |
| Sales:Time/Yr | 5 | -3 | 13 | -2 | -7 | 71% | 28 | -52 | 80 |
| Stocks:Sales | 10 | 8 | 18 | 6 | 11 | 26% | 35 | 1 | 34 |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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