MNI 5 Things: UK Retail Sales Seen Showing Recovery From March

--Analysts Tend to Underestimate UK April Retail Sales

By Jai Lakhani

     LONDON (MNI) - The UK's April retail sales data print, due Thurs, will

reveal if the sector managed to rebuild after March's weather induced slide in

sales. MNI median expectations, taken from a poll of analysts, look for a 0.9%

m/m rise in total sales volumes and flat growth m/m in ex-fuel volumes.

         Apr Retail Sales  Apr Retail Sales  Apr Retail Sales   Apr Retail Sales

           Incl. Petrol %    Incl. Petrol %    Excl. Petrol %     Incl. Petrol %

                      m/m               y/y               m/m                y/y

--------------------------------------------------------------------------------

MNI

Median                0.9               0.2               0.0                0.4

Prior                -1.2               1.1              -0.5                1.1

     Ahead of the release, we outline five themes for particular attention.

     1) Analysts Pessimism in April: April tends to be a month where analysts

are culpable of under-estimating headline retail sales. The y/y figure for April

is on average under-estimated by 1.51 percentage points. Given, Bloomberg

consensus estimates point to a 0.2% y/y figure for April, an under-estimate of

the same nature would be warmly received.

     2) MNI Median Estimate may be base effect: Growth in April retail sales is

forecasted at 0.2% y/y, sharply down from 1.1% in March. Although there wasn't a

noticeable Easter boost this March, a base effect from a strong April last year

could be driving the low forecast. Last April, retail sales grew by 2.6% m/m,

driven by household goods (5.1%), other stores (6.6%) and non-store retailing

(2.9%).

     3) Weather distorted March could mean strong rebound in April: March's

"Beast from the East" contributed to retail sales volume y/y fall to 1.1% after

February's 1.5%. The m/m fall was also fairly large with March seeing a decline

in volumes by 1.2% compared to growth of 0.8% in February. The last comparable

month of poor weather was in January 2010. Comparing this with February 2010

shows a rebound in the y/y figure by 6.9% and the m/m figure improved by 4.7%.

Whilst the weather in January 2010 was considerably worse, the upward effect in

April from weather in March cannot be ignored.

     4) Surveys give mixed bur overall negative message: The survey data for

April does not support the notion of a bounce back in April for retail sales.

The BRC showed retail sales growth falling to a record-low in April and

contracted 3.1% on the year in April, compared to a 6.3% surge in April 2017.

Furthermore, the CBI retail sales growth recovered in April after a -8 figure

for sales volume in March was followed up with -2 in April. Whilst an

improvement from March, the figure was still below February suggesting a gloomy

picture for retail sales.

     5) Visa Data Points to Subdued Confidence. Retail weakness was also

highlighted in the April Visa UK Consumer Spending Index. Seasonally adjusted,

spending fell 2.0% y/y in April, broken down into a sharp 5.4% fall in

face-to-face sales, the biggest fall in six years, and a smaller 0.1% drop in

eCommerce sales. The report highlighted muted appetites to spend on

discretionary goods, with spending on furniture, electrical appliances and

recreational activities all weak, suggesting confidence remains weak despite the

recent uptick in real wages.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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