U.K. Distributive Trades Survey Weakens

Retailing In retailing, sales in May for the distributive trades survey compared to a year ago show that the May reading dropped to -10 from +5 in April and from a positive reading in March. Orders compared to a year ago fell to a - 30 reading in May from a +1 in April. Sales adjusted for the time of year fell to a -18 reading from +21 in April. The stock-sales ratio rose to a +25 in May after a -2 in April, indicating potentially that inventories are beginning to build while sales are weakening.

The queue percentile standings for these readings show that orders compared to a year ago are extremely weak with the 8.8% standing. Sales compared to a year ago have a 20-percentile standing; sales compared to the time of year have a 23.9% standing. The stock-sales ratio has nearly an 89-percentile standing, potentially an indication of a building stock-sales imbalance.

The readings for expectations in retailing show that the June expectations for sales compared to a year ago are flat, an improvement from -7 logged for May. Expected sales adjusted for the time of year have been running hot and cold month-by-month. Orders compared to a year-ago are decisively weaker than the -25 reading in June when compared to -8 in May; they are even slightly weaker than the March reading of -23. Expected sales for the time of year at a -9 reading compares to a +16 reading for the month of May. The -9 reading breaks a string of positive numbers. The stock-sales ratio moves up to +14 in June from +5 in May.

The queue percentile standings for expectations essentially mirror the readings that we see for sales in the current period. Orders compared to a year ago have a 7.4 percentile standing. Sales compared to a year ago are at a 27-percentile standing. Sales evaluated for the time of year log a 29.5 percentile standing. The stock-sales ratio expected for June has a 64.6 percentile standing.

Wholesaling Wholesaling readings roughly mirror the retailing with slightly firmer percentile standings. Sales in May compared to a year ago slipped to a -5 reading from +13 in April. Orders compared to a year ago fall to -8 from -2 in April. Sales for the time of year have a +8 reading compared to plus 15 in April. The stock-sales ratio moves up to +31 from plus 18 in April.

The queue rankings show percentile standings for wholesale sales a year ago at a 23.6 percentile mark. Orders compared to a year ago have a 31-percentile standing, much stronger than their counterpart reading for retailing. Sales for the time of year have a 41.2 percentile standing, also stronger than its counterpart reading for retailing. The stock-sales ratio has a 90.5 percentile standing, close to the queue standing for retailing.

Expected wholesale sales in June compared to a year ago show a -3 net reading compared to a +9 in May. Orders, compared to a year ago, have a -6 reading, a worsening from -1 in May but an improvement from April and March. Wholesale sales for the time of year slipped to -6 in June from +14 in May. The stock-sales ratio edged lower to a net reading of +17 in June from +20 in May.

The percentile standings for expected wholesale sales in June show a 27-percentile standing for sales compared to a year ago. Orders compared to a year ago have a 32-percentile standing; that's much stronger than the counterpart reading in retailing for expectations. Sales for the time of year have a 44.9 percentile standing, also considerably stronger than the retail counterpart for expectations. However, the stock-sales ratio, with a 67.7 percentile-standing, is close to the ranking for expected sales in retailing.

Summing up These data show persistent and clear weakness in the U.K. distributive trades with the weakness being led by retailing and perhaps not yet kicked back to affect the wholesale sector. We'll have to see about that in coming months. U.K. economy continues to be under pressure as the inflation rate continues to be high. U.K. consumer confidence is slipping, and the CBI industrial survey has been weakening as well. The outlook for U.K. policy is that the Bank of England will continue to raise rates.