CBI report shows unexpected dip in August sales

British retailers reported an unexpected drop in retail sales in August, as business optimism weakened at its fastest rate for three years, the Confederation of British Industry said on Thursday.

Almost a third of retailers (31pc) reported a fall in the volume of sales compared to a year ago in August, compared with 27pc who saw an increase, according to the CBI's monthly distributive trades survey.

The led to the reported sales balance falling to -3 compared with economists' forecasts for an increase to +15.

Official retail sales data for July showed unexpected growth, suggesting the sector was on a firmer footing than previously thought.

But the CBI's quarterly survey showed that retailers took the gloomiest view of their business situation since the height of the financial crisis.

Although many retailers remained hopeful of a sales bounce in September, a balance of 17pc expect the business situation to deteriorate over the next three months as sentiment weakened at its fastest rate since February 2009.

The survey of 134 firms also found that twelve of the thirteen retail sectors slowed on an annual basis in August.

Only the footwear & leather sector bucked the trend with a modest acceleration in growth to +58 from +42 in July.

Most British retailers have been struggling because consumers have been reluctant to spend as rising prices, tax increases and high unemployment are hurting their spending power.

Judith McKenna, chairwoman of the CBI distributive trades panel and Asda chief operating officer, said: "Although this summer's events created a mood of celebration across the nation, these figures would suggest this positivity did not extend to the high street.

"However, although retailers expect the overall business situation to worsen in the coming three months, they still expect sales to rise year-on-year in September."

Source : Szu Ping Chan - The Telegraph
www.telegraph.co.uk/finance/economics/9494650/CBI-UK-retailers-report-unexpected-dip-in-August-sales.html