Haver Analytics
Haver Analytics
United Kingdom
| Feb 26 2024

U.K. Retail-Is It Recovery or Just Volatility?

The Confederation of British Industry Survey of retailing and wholesaling showed that retail and wholesaling sales declines slowed sharply in the U.K. in February.

Retailing Retail sales compared to a year ago were at a -7 reading in February, compared to -50 in January and -32 in December. This is a sharp improvement compared to the numbers sales had been posting; however, it is still in the lower 26-percentile of monthly reported metrics since 2000. But it is also the fifth largest month-to-month improvement on that that timeline of 284 monthly changes reported since mid-2000. This is a sharp monthly gain but still a very weak number. Orders compared to a year ago locked-in another declining figure at -14 in February, but again it was sharply better than the -36 logged in January and the -54 in December. Orders compared to a year ago have a 22.5 percentile standing. Sales, for the time of year, also improved sharply, logging a -1 reading in February compared to -47 in January and -25 in December. Sales, for the time of year, moved up above their median for this timeline to log a percentile standing in the 61st percentile. The month-to-month gain was sharp, ranking as the sixth largest change in the month-to-month survey value since mid-2000. On ranked data, the median occurs at a ranking at the 50th percentile. The reading for stocks rose slightly to 17 in February from 15 in January and also has a rank standing above its historic median, which is a standing at its 56th percentile.

Expectations March expectations for retail sales compared to a year ago also improved sharply- still logging a negative figure at -15 in March compared to -50 in February and -41 in January. However, the reading had been as strong as -6 in December of last year. Still, the month-to-month jump in the survey is the fourth largest month-to-month change in the survey value on data back to mid-2000. The ‘sales for a year-ago’ figure, despite its extraordinarily sharp improvement from February and January, still has a lower 13th percentile standing when placed in their historic queue of ranked data. Orders, for the time of year, were not much changed from February, logging another deeply negative number at -36 in March compared to -35 in February and -29 in January. The standing for the March reading is in its lower 5.6 percentile, an extremely weak reading. This is the one category that occupies a middle ground standing and does not have a strong monthly improvement. Expected orders are weak and have been bottom-scraping and weak for the last three to four months in a row. These survey responses are perplexing. On one hand, we are seeing ‘near record’ improvement month-to-month in several important categories but are still left with what are generally quite weak readings in the aftermath of those sharp improvements.

Distributive trades Sales in the CBI distributive trades survey also logged some weak figures in February; however, the February readings for wholesaling turned to positive numbers compared to the preponderance of negative figures in January and December. Sales compared to a year-ago rose to 15 in February from -26 in January and -24 in December. The standing for sales gains from year ago is in their 49th percentile, just a touch below their historic median. Orders compared to a year ago have a +14 reading in February compared to -37 in January and -36 in December. That metric has a 60.6 percentile standing, and it is more significantly above its historic median for the period. Sales for the time of year logged a +16 reading in February, up from -22 in January and -6 in December, logging a reading above their historic median at the 53.9 percentile. The monthly change in orders is the 20th largest since mid-2000 and the changes in orders from a year ago show the third highest month-to-month change while sales for the time of year have the 9th highest rank on the timeline. Distributive trades echo the turnaround we see in retailing and manage to post higher percentile standings on sales levels as well that are close to or above their historic medians.

Distributive trades-expectations Expectations for March also turned positive after a string of negative numbers. Expected sales rose to a +5 reading in March from -27 in February and -18 in January but still have a lower 38th percentile standing, below its historic median. Orders compared to a year ago rose to +7 in March from -32 in February, surpassing the median with a 56.5 percentile standing. Sales for the time of year moved to a +13 reading in March from -20 in February to a 56.5 percentile standing. Distributive trades are much more constructive on the outlook, not only showing some positive figures but also figures that are above their historic medians for orders compared to a year ago and sales, for the time of year. The expectations also log extremely strong month-to-month changes.

Summing up The U.K. economy, however, remains challenged and struggling. So it's hard to tell what these readings are going to mean. There's a great deal of volatility in these numbers and we still see that for retailing the current activity assessments as well as the expectations for next month continue to show a lot of sub-par readings compared to historic benchmarks as well as reading that show contractions in economic activity. Still, against that uneven background, there is some very impressive month-to-month improvement being registered. Although the distributive trade numbers are somewhat better than the retail sales in terms of standings, distributive trades may be posting positive numbers because the sector is servicing international demand as well as domestic demand.

  • 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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