U.K. Distributive Trades Survey: Weakness Lingers and Is Mixed

Retailing and Wholesaling continue to show wear and tear The United Kingdom’s distributive trades survey has four parts. There's a survey of retailing and a separate survey of wholesaling. Then for each one of these surveys, there's a module that addresses current conditions and another one that addresses expected conditions.

Current Conditions vs. Expectations for the distributive trades In this month's report, the current conditions assessments improved in retailing but were mixed for wholesaling. Expectations in retailing and wholesaling were also mixed as to month-to-month changes, but the levels of the responses remained quite weak.

The Specifics Current Retailing- Retail sales compared to a year ago improved sharply to a -8 reading in April compared to a draconian -41 in March. Orders compared to a year ago improved at a reading of -24 in April from -38 in March. Sales for the time of year improved to -31 from -36. Sales compared to a year ago have a below median 29.2 percentile standing, while orders compared to a year ago have a 16.9 percentile standing and sales evaluated for the time of year have a 12.3 percentile standing. In each case, the reading from April is below its median reading of the last 24 years. These readings as a collection are weak readings.

Expected Retailing- The expected results for retailing in the survey show mixed results. The reading for sales compared to a year ago at -33 in May is slightly weaker than -30 in April. Orders compared to a year ago improved to -29 in May from -41 in April. But the survey shows a deterioration in sales for the time of year at -38 in May compared to -35 in April. The rankings for these readings range between the 10.5 percentile and 4.2 percentile, range marking them as all extremely weak readings in their historic queue of standings.

Current Wholesaling- Wholesaling also generally shows slippage in April. Sales compared to a year ago fell to -33 in April from in -29 in March, while orders compared to a year ago improved to -32 from March’s -38. Sales for the time of year, which post a reading of -31 in April compared to a reading of -20 in March, demonstrated slippage again. The rankings for these readings range from 4.2 to 9.2 in percentile standing terms.

Expected Wholesaling- Turning to expectations, sales compared to a year ago nudged lower to -26 in May from -25 in April. Orders compared to a year ago improved nicely to a reading of -28 in May compared to -38 in April; expected sales for the time of year slipped to -28 from April’s -27. Several of these are small stumbles month-to-month. But these readings range from a low percentile standing of 7.7 percentile to a high standing at a 12.6 percentile – all weak metrics.

Summing up What is quite clear in all of these readings is that the standings are exceptionally low. There’s widespread, even if somewhat mixed, slippage in these readings. Current sales are somewhat of an exception with some monthly traction amid still very low readings. Yet, the United Kingdom has been an economy that has continued to fight against an inflation overshoot so that the Bank of England does not really have a great deal of flexibility in the conduct of policy. Still, the U.K. is geographically close to the European Monetary Union where rate reductions are still in train.

The U.K. continues to be at risk to the U.S. tariff plan even though the U.S. does not run a deficit with the U.K. in trade. Despite ‘The Formula’ that allegedly has been used to set reciprocal tariffs, the Trump administration has found some different wrinkle to generate a tariff on goods from the U.K. Given this evolving situation, it's not surprising that the expectations are continuing to erode in the U.K. distributive trades survey.