November retail sales flat, says CBI

Retail sales slowed unexpectedly this month as mild weather deterred shoppers from buying winter clothes, according to the CBI’s distributive trades survey.

The balance of sales dropped to +1 from +2 in October. That was its lowest since June and wrong-footing analysts who had expected a rise to +8.

However, retailers were relatively upbeat about the outlook for Christmas. The expectations balance rose to +24 from +23.

“This is the second month in a row that retailers’ expectations for growth have been disappointed, perhaps due in part to the mild start to autumn,” said Barry Williams, a senior executive at British supermarket chain Asda and chair of the CBI survey panel.

“But despite challenging conditions on the high-street, retailers remain optimistic for the Christmas period, and have taken on more employees in anticipation of a shopping rush.

Separately, the Office for National Statistics confirmed GDP grew by 0.8 per cent in the third quarter but economists warned that the recovery was built on “shaky foundations”.

Household spending grew at its fastest rate in more than three years, at 0.8 per cent, despite a meagre 0.4 per cent rise in earnings. Households alone accounted for 0. 5 per cent of GDP growth in the quarter.

The other main driver was stockbuilding by businesses, which increased by £5 billion – equivalent to a 0.9 per cent contribution to overall growth.

Economists warned that unless exports or business investment starts to pick up, the recovery will be unsustainable. Alan Clarke, UK economist at Scotiabank, described it as “solid growth on shaky foundations”.

“Most of the heavy lifting is coming from the consumer and stock building. That is not a great long term prospect for growth,” he said.

The official figures raised fresh concerns about exports, which fell a heavy 2.4 per cent in the quarter. Net trade was a large drag on growth, offsetting the entire contribution from stockbuilding.
Business investment did grow by 1.4 per cent, but remained smaller than in the first quarter of the year.

Source : Philip Aldrick - The Times
www.thetimes.co.uk