U.K. Distributed Trades - Upswing in Effect and Expected to Persist

The U.K. distributive trades survey provides sector surveys for retailing and wholesaling in the United Kingdom in April as well as look-ahead observations or expectations for May.

Retail sales and orders currently: In April, retail sales, compared to a year ago, picked up to +5 compared to + 1 in March and +2 in February. Orders compared to a year ago were also stronger at a reading of +1 compared to -2 in March and a much weaker -25 in February. Sales for the time of year are quite upbeat with the survey value of 21 compared to 12 in March and 6 in February. The stock-to-sales ratio fell in April compared to March.

Wholesale sales and orders currently: For wholesaling, sales compared to a year ago were slightly weaker, falling back to a +13 reading from +18 in March, but still are much better than the -28 logged in February. Orders compared to a year ago were slightly improved month-to-month at -2 compared to -3 in March, and much better than the -23 logged in February. Sales for the time of year were down sharply at +15 but from an extremely elevated +35 in March; moreover, they compare favorably to zero in February and rank solidly in April. The stock-to-sales ratio has risen steadily from February to March to April.

Current sales and orders queue rankings: The queue ranking data reported sales in retailing and distributive trades show sales for the time of year extremely strong at a 93-percentile standing for retailing and at a firm 52-percentile standing for wholesaling. In retailing sales compared to a year ago have a 40-percentile standing and orders compared to a year ago have a 46.5 percentile standing; each of those metrics is below its respective historic median- on percentile ranked data the median lives at the 50-percentile ranking. The stock-to-sales rank in retailing is low at a 3.5 percentile standing. For distributive trades sales compared to a year ago, sales log a 46-percentile standing and orders compared to a year ago have a roughly 40-percentile standing; these are not too different from the standings for retail sales. The big difference is in the stock-to-sales ratio which is above its historic median for wholesaling at a 64-percentile standing compared to a very weak standing in retailing.

Expectations Expected retail sales and orders: Expected retail sales for the month ahead project a decline in sales compared to a year ago on a -7 reading in May compared to +9 in April. Orders compared to a year ago are also expected to weaken to a -8 reading compared to zero for orders relative to a year ago as assessed last month. However, both these metrics are stronger in May than their March and February values. Moreover, sales, adjusted for the time of year, are expected to rise to +16 in May from +13 in April. This also compared to +11 in March and -2 in February. Expected retail sales for the time of year are strong. The stock-to-sales ratio is expected to be slightly lower.

Expected wholesale sales and orders: Expected wholesale sales year-over-year are stronger at +9 in May compared to +2 in April and compared to values of -22 in March and February. Wholesale orders expected compared to a year ago are improved to -1 compared to -13 in April and compared to much weaker values in March in February. Expected wholesale sales for the time of year are expected to step back to a +14 reading from +17 in April, leaving them even with March’s +14 but stronger than a -8 reading in February. The stock-to-sales ratio is expected to step up in March and to continue with a step-up trend.

Expected retail and wholesale sales and orders queue rankings: The rank standings for expectations are somewhat similar as retailing has an 89-percentile standing for sales for the time of year while wholesaling logs an above median 60th percentile standing- not as strong- but a reading also well above its median. Retailing expectations for sales and orders compared to a year ago are weaker than in wholesaling; the retailing rank for sales compared to a year ago has a 17.5 percentile standing and expected orders compared to a year ago have a 28th percentile standing. For wholesaling expectations, the rankings are 43.2% for sales and 40.7% for orders. Retailing also has a low ranking for the stock-to-sales ratio on expected data while wholesaling has a 75.4 percentile standing; that is firm.

Summing up The two surveys show a more upbeat retail response for the month of April to current sales while wholesaling has a more upbeat response for the expectations for May. But all the series show a sharp improvement from weak data logged in February (and, in quite a number of cases, strength compared to both February and March). Percentile standings on the various distributed trade components are weak except for sales for the time of year and that is for both retailing and wholesaling as well as for current sales and expected sales (stock-sales ranking are an exception as they have firm rankings on expected data). Merchants are relatively upbeat on what is - in some sense - the seasonally adjusted view of the world; however, they are not so upbeat in terms of comparing their sales and orders to a year ago at least not in terms of the overall rankings of their responses to the survey results in April (or in May, in the case of expectations). The survey leaves us with a mixed view of prospects and conditions and the U.K. distributive sector. It is not a surprising result at a time when so many other economic variables are at cross purposes with each other and when inflation continues to run high and as the Bank of England still has a good deal of work to do. It would be hard for a survey to be too upbeat in this situation. In fact, given the economic situation, the survey is better than I would have expected.