CBI survey says strong retail sales growth continuing

There was positive news from the high street this month with retailers reporting improved year on year sales for the third consecutive month and an increase in staff on the shop floor, the CBI said today .

The CBI’s latest quarterly Distributive Trades Survey covers the first two weeks in November and revealed that year-on-year growth in retail sales volumes continued for a third consecutive month, with +49% of retailers reporting an increase in their volume of sales compared to a year ago, and +16% a reduction. The resulting balance of +33% is the highest since June this year (+42%) and slightly ahead of expectations (+27%).

However, retailers considered the volume of sales to be below normal for the time of year (-15%) and to a greater degree than expected (-4%).

Year-on-year sales volumes growth was positive in nine of the thirteen individual retail sectors. Grocers reported volumes growth for the seventh month running (+33%), while volumes growth in the clothing sector (+29%) proved better than expected (+4%), although weaker than the previous month (+57%).

Growth in orders placed with suppliers on a year ago has also continued to climb, with November’s balance of +16% exceeding expectations (0%) and the highest figure since June (+23%).

Elsewhere, the pace of growth in retail price inflation (+25%) slowed for the third quarter, running to its slowest since November 2009 (+17%), and in line with expectations (+24%).

Looking ahead to December, volumes growth on the year is expected to decelerate slightly (+25%), although sales are expected to move back into line with the seasonal norm (-1%). Orders placed with suppliers are expected to increase on the year (+11%). Inflation is expected to continue at a similar pace (+24%) and employment is expected to continue growing (+9%).

Retailers remained relatively cautious about the overall outlook, despite the strength in sales volumes. Retailers expect the business situation to improve over the next three months (+7%) to the greatest extent in two years (+11%, November 2010). This is echoed in a strong rebound in year-on-year employment growth (to +7% from -25%, August); this, and the balance from May (+12%), are the only positive employment balances since 2005.

However, the balance of retailers expects to reduce capital expenditure for the year ahead for the seventh quarter running (-12%), little changed from August (-13%).

Anna Leach, CBI Head of Economic Analysis, said:

“This months’ survey is reason to be cheerful as we head into the festive period. Retailers across the board will be heartened by these encouraging results. The increase in employment, along with expectations for improvement in the business situation over the next quarter, point to a welcome boost to the sector.

But the fact that retailers are still reluctant to authorise new capital expenditure shows that there is some way to go before activity on the high street is back to normal.”

Elsewhere motor traders reported their strongest sales volumes since December 2009 (+58%), with a balance of +50%, significantly outstripping expectations (-19%). However, expectations for December are conservative (-3%).

Wholesalers meanwhile reported a six-month high in year-on-year sales volumes growth (+29%), exceeding expectations for a modest decline in sales (-6%). Sales volumes are expected to be broadly flat on the year in December (+3%).

Source : CBI
www.cbi.org.uk/media-centre/press-releases/2012/11/strong-retail-sales-growth-continues/