U.K. Retailing Slips as Wholesaling Improves; Outlooks both worse; All Survey Response Rankings Are Weak

The U.K. distributive trades survey covers retail sales and wholesaling, providing assessments of current activity as well as expectations for the month ahead. October is a mixed report with retail sales weakening and wholesaling showing some improvement. However, the outlook for both retailing and wholesaling deteriorates in November. All ranking statistics are weak except for inventories.

U.K. retailing Current assessment- In retailing, sales compared to a year ago in October fell to -36 rating from -14 in September. The sales responses have been somewhat volatile recently; however, the October reading of -36 is well below the 12-month average of -13. Orders compared to a year ago also slipped to -37 from -19; that response compares to a 12-month average of -24. Sales assessed for the time of year slipped to -10 in October from +5 in September. Those readings compare to a 12-month average of zero. Stocks relative to sales moved up to +27 in October from +6 in September, above the 12-month average of +17. An increase in the stock to sales ratio while sales are weakening is not generally a good sign. The ranking statistics on the table rank the current responses on the timeline back to March 2000. On that timeline, the performance of sales over a year ago has of 5.6 percentile standing. Orders compared to a year ago have a 6.3 percentile standing. Sales assessed for the time of year have a 36.6 percentile standing. The stock-sales metric has a 91.2 percentile standing. These are all quite weak assessments, and the stock sales ranking does not appear to be good news with sales weakening.

Retail outlook- The retail outlook for the categories listed above all show deterioration month-to-month except stock stock-sales response which rose. The outlook assessments are below their 12-month averages but only slightly below the average for sales performance over one year. The ranking metrics and the responses are all still extremely weak. The stock-sales ratio again has a strong standing in its 86.7 percentile.

Wholesaling survey Current assessment- In wholesaling, in October sales compared to a year ago improved to -15 from -23 in September. The October -15 reading compared to a 12-month average of -11. Orders compared to the year ago, however, deteriorated to -25 from -15 and those figures compared to a 12-month average of -15. Sales for the time of year improved to -1 in October from -3 in September but compared to a stronger +8 average over the last 12 months. The stock-sales ratio response in October fell to 10 in October from 43 in September and compared to an average of 18 over 12 months, indicating a very different inventory conditions and dynamics for wholesaling than in retailing. In terms of rankings, the performance of sales compared to a year ago reveals a 16.5 percentile ranking. Orders have a 10.9 percentile ranking. Sales for the time of year have a 29.9 percentile ranking and the stock-sales ratio has a 39.1 percentile ranking. All these are still quite weak with the stand-out feature being that the stock-sales ratio isn't moving in the opposite direction as it is for retailing.

Wholesale outlook- The outlook portion of the wholesale survey for November shows weakness across the board. All these metrics show month-to-month deterioration and much weaker performance in November than over the last 12 months. The stock-sales ratio for November falls to a metric of +16 from +37 in October but October clearly was an outlier strong-reading. The November value of +16 is only slightly above the 12-month average of +14 - an exception among this month’s responses. Looking at the rankings of these various metrics, we continue to see weak readings for the outlook across the board. The stock-sales standing at a 65.6 percentile is firm but not a worrisome reading, particularly with the stock-sales ratio in November being close to its 12-month average.

Summing up On balance, the distributive sales survey for wholesaling and retailing shows weakness in the current month and weakness in the outlook. Retailing shows more with the belonging inventory problem than wholesaling. Retail order volume is showing quite considerable weakness and the trend that's impressively negative.