Retail sales picked up in the year to November following a significant dip in October, according to the latest CBI Quarterly Distributive Trades Survey.
The survey of 118 respondents has however, seen the strongest growth in average selling prices in over 26 years in the year to November. Similar price growth is expected next month. Orders placed with suppliers rose at a solid rate over the year and are set to grow at a similar pace next month. Looking at individual sectors, grocers and clothing retailers reported robust sales.
But tepid trading conditions for the retail sector are taking their toll on hiring and optimism. The quarterly survey showed that employment declined in the year to November, for the fourth quarter running, and is set to fall again in the year to December. Retailers once again expect the business situation to deteriorate – albeit marginally – over the next quarter, but investment spending is expected to grow slightly in the year ahead for the second consecutive quarter.
Rain Newton-Smith, CBI Chief Economist, says: “It’s great to see retail sales rebound this month after a big dip, but let’s be clear: our high streets are not out of the woods. Ahead of the crucial run up to Christmas, the weaker pound has pushed up prices and retailers are nervous about business conditions and are trimming their workforces.
“The relief from the rising burden of business rates in Chancellor’s Budget will be welcome on the UK’s high streets, as will the investment in local transport connections and housing which should supporting our local communities but the job is not done, now is the time for swift delivery.”
39% of respondents reported that sales volumes were up on a year ago in November, while 13% said they were down, giving a balance of +26%
Retailers expect sales volumes to pick up again next month (+30%), with 39% expecting them to rise and 9% to fall
The volume of sales for the time of year in November were considered broadly in line with average (+3%)
The volume of orders placed upon suppliers rose over the year to November, with 34% of survey respondents reporting a rise and 11% reporting a fall, giving a rounded balance of +22%. Firms anticipate orders will rise at the same pace next month (+22%)
Retailers expect their overall business situation to deteriorate slightly over the next three months (-5%), the fourth consecutive quarter of falling sentiment
Investment intentions for the next year compared to the previous twelve months were positive (+6%)
Average selling prices rose at the fastest pace since May 1991 (+75%) in the year to November (+75%) with prices set to rise at a similarly elevated pace next month (+70%).
Year-on-year growth in internet sales volumes (+46%) was broadly unchanged from last month (+45%)
Grocers reported strong sales volumes in the year to November (+65%), while robust growth was also reported in other sub sectors, such as hardware and DIY (+51%) and clothing (+53%).
58% of wholesalers reported sales volumes to be up on last year and 18% said they were down, giving a balance of +40%.
42% of motor traders reported sales volumes to be up on last year and 24% said they were down, giving a balance of +18%.