Retail sales rise shock horror

Here we are a few days before Christmas, and the retailers (well, the CBI on their behalf) are admitting that they're having a pretty good time of it. In the past few weeks most of the chatter from the industry has been doom-laden, but (for reasons set out below) I have learned never to believe anything that the retailers tell us. For better or worse, you have to wait for the official ONS data to find out what's really happening.

Economists are not supposed to rely on anecdotal data, but we all do, and the UK retail and housing sectors don't give you much choice in the matter. I became suspicious of this year's laments when I went to an out-of-town M & S on two consecutive weekdays in late November, to find the place heaving. Earlier this month, the temporary pedestrianisation of Oxford Street apparently led to unbelievable overcrowding. Now, surprise surprise, the CBI has admitted that all of those people were spending money, not just mooning around.

The CBI and its friends at the British Retail Consortium (BRC) publish data that seem designed to put as bad a gloss on retail activity as possible. Partly this reflects the industry's addiction to "same store" data for year-to-year comparisons. The claim is that this allows a better view of the underlying trends, but the truth is the exact opposite. Ignoring store openings makes it impossible to assess overall volumes. Look at it this way: if you wanted to look at long-term trends in global industrial output, would you think it would be helpful to leave out data from China, on the grounds that they weren't players a few years ago?

Then there are the surveys themselves. The CBI doesn't ask "are your sales up or down?" It asks stores to say whether sales are higher or lower than expected, and compares those results with those it got for the same question last year. If a lot of companies are expecting a 10% sales gain but are only seeing a 5% rise, they give a negative answer, even though actual sales are higher. The CBI then packages this convoluted nonsense into a press release that says "Retail sales lowest in 20 years" or whatever, and the press faithfully report it as such. The CBI may not be intending to mislead the public with these surveys, but to be honest I'm not sure what else they can be trying to do.

The old joke was that farmers always complained about the weather, no matter what it was. The retailers have raised that to a fine art -- and don't get me started on the estate agents.