U.K. Retail Sales and Sales Volumes Shrink in December

U.K. retail sales fell by 3.6% in December after rising 1.1% in November and rising modestly in October. The progression of nominal retail sales growth shows sales up by 0.5% over 12 months, falling at a 5.2% annual rate over six months and falling at a 9.3% annual rate over three months. On a sequential basis, retail sales have been falling at an accelerating pace. Over the sequential basis as well, The CPI-H in the U.K. rose 4.2% over 12 months, decelerated to a 2.2% annual rate over six months, and then crept higher by 0.9% at an annual rate over three months completing the deceleration cycle. Inflation gave sales a positive push over each of these horizons but a sequentially smaller push from 12-months, to six-months, to three-months.

Sales volumes- Not surprisingly these conditions have led to weakness and declines in real retail sales, which we can also refer to as retail sales volume. Retail volumes fell by 3.3% in December, after rising by 1.5% in November, and falling by 0.1% in October. Sequentially, the progression of retail sales is weakening as retail volumes fell by 2.5% over 12 months, then fell at a 7.2% annual rate over six months, and then fell at a faster 7.7% annual rate over three months.

Passenger car registrations- In addition to weakness in retail volumes, passenger car registrations have fallen in each of the last three months; sequentially, passenger car sales are getting much weaker. Passenger car registrations year-over-year are up by 9%, but over six months they're falling at a 2.8% annual rate, and over three months registrations are falling at a 21.4% annual rate. This is substantial and growing weakness in passenger car registrations implying also significant weakness in sales.

U.K. retail surveys- In addition to these statistics on actual retail and car sales, we can look at a few the surveys on the U.K. economy. The Confederation of British Industry (CBI) metric for sales this time of year fell by 9 points in December, after falling six points in November, and falling 15 points in October. The CBI survey for the volume of orders year-over-year fell by 32 points in December after rising by 15 points in November and falling by 18 points in October. GfK consumer confidence survey rose by two points in December after rising 6 points in November and falling by 9 points in October.

Sequential performance of surveys- Next we can track these survey metrics sequentially from 12-months to six-months to three-months. The CBI survey for retail sales for ‘time of year,’ essentially a seasonally adjusted concept, shows growing weakness. The survey drops 22 points over 12-months, logs a drop of 26 points over six months, and a drop of 30 points over three months. The CBI survey for the volume of orders, looking at the year-over-year changes, also shows persistent negative numbers with a decline of 33 points over 12 months, a decline of 44 points over six months, and then a substantial decline of 35 points over three months. The GfK confidence survey rises by 20 points over 12 months but then gains just two points over six months, and falls by one point over three months. The surveys reinforces the idea of sales being on a weakening trend and being currently under downward pressure.

Quarter-to-date- These statistics are for December and complete the data for quarter; The quarter-to-date U.K. retail sales change fell by 0.9%, but sales volumes fell more sharply, at an annual rate of 3.5%. Passenger car registrations fell at an annual rate of 17.3%. The CBI survey for retail sales for the time of year is 15.3 points weaker than it was in the third quarter; the survey for the volume of orders year-over-year is weaker by 6 points than it was in the third quarter; the GfK consumer confidence index is unchanged on the quarter compared to the one quarter ago average.

Percentile standings- As a final evaluation we can rank sales growth historically and on data back to 2002. When we do this, the ranking of the U.K. sales rate is in its lower 10th percentile; retail volume is also weak, in its lower 9.7 percentile, about the same relative standing as for nominal retail sales. Passenger car registrations year-over-year still carry a relatively high-ranking in their 77.8 percentile, but registrations are weakening sequentially, so this ranking is under downward pressure. The ranking the levels of the CBI surveys show retail sales for the time of year with the 17.1 percentile standing, CBI order volume growth year-over-year is at an anemic 1.6% standing, and the GfK consumer confidence index at a 30.4 percentile standing.

Summing up There is not much equivocation or difference among these various metrics. The performance of U.K. retail sales whether its actual sales, inflation adjusted sales, surveys of sales, or even in coupling the retail experience with car registrations, it’s all the same- except for the year-on-year car registration standing. The consumer in the U.K. is under pressure and pulling back.