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Economy in Brief

Deck The Halls With Boughs Of Optimism? UK CBI Surveys Shows Upward Momentum, Then...
by Robert Brusca   December 15, 2010

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
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