CBI reports toughest retail conditions in 18 months

Britain's retailers are facing their toughest trading conditions in almost 18 months as cash-poor consumers cut back on their spending, the CBI said.

The monthly healthcheck of the high street from the employers' organisation recorded the steepest fall in sales since January 2012 – continuing the weakening trend over the past six months.

In findings that will raise doubts about the pace of the UK's likely economic recovery, the CBI said sales of clothing, footwear and household durable goods were all lower in May than a year earlier. Online sales – a source of growing retail strength in recent years – were down for the first time since August 2011.

Barry Williams, Asda chief merchandising officer for food and chair of the CBI distributive trades survey panel, said: "Retail sales growth has weakened since the start of the year as households continue to feel the pinch, with wages failing to keep pace with the cost of living."

Just under a quarter of the firms (23%) questioned in the CBI survey said sales were higher this month than in May 2012, while 33% said they were lower. The rounded balance of -11 percentage points was the weakest since the -22 points in January 2012, when Britain was in recession.

Only 8% of retailers said business was good for the time of year, against 25% who said they were bad. Retailers had been expecting a poor May, the CBI said, but had been surprised by the lack of consumer spending.

Shops and stores expect a modest bounceback in June to be sustained across the summer months but are still planning to cut back on investment. Almost half of retailers (41%) said they would trim capital expenditure over the next year while only 18% said they would increase investment. The balance was the weakest since February 2012.

Despite the disappointing level of sales, the survey found that as many firms were hiring staff in May as were laying them off. The finding was in line with expectations and a slight improvement on three months earlier.

Source : Larry Elliott - guardian.co.uk
www.guardian.co.uk/business/2013/may/29/cbi-uk-retailers-high-street-sales