Retail

UK retailers downbeat amid high street gloom: CBI survey


UK retailers see little to cheer about in the nation’s high streets, with a survey of retailers reporting sharply weakened retail sales in October, fuelling suspicion that consumers may be tightening their purse strings.

Only 26 per cent of retailers surveyed reported that sales in October were higher than those of a year ago while 21 per cent reported they were lower.

The resulting balance between depressed and upbeat retailers was 5 per cent, the lowest the sector has reported since April this year, according to the CBI’s Distributive Trades Survey of 45 retailers.

A group of economists polled by Reuters had expected the net figure to be 20 per cent.

Among sectors, the lone bright spots appeared to be that of non-stores, meaning internet and mail orders, with a net figure of 54 per cent of retailers reporting growth, and footwear and leather sales, with a net 11 per cent of retailers reporting a rise in sales volumes.

The worst-performing subsectors were furniture & carpets (a balance of minus 75 per cent), other normal goods (minus 31 per cent), and hardware & DIY (minus 30 per cent).

According to Howard Archer, chief economist at the EY Item Club, a number of factors may be limiting consumer spending:

With the savings ratio being very low, consumers may be keen to avoid further dissaving. The August rise in interest rates may have reinforced consumer caution. Meanwhile, lenders have cut back on the availability of unsecured consumer credit.

Mr Archer added that new data showing earnings growth picking up may brighten up consumer sentiment.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, pointed out the survey “often is too downbeat if the official measure of sales fell in the prior month, as it did in September.”

“Nonetheless,” he adds “the fundamentals — subdued consumer confidence, slowing employment growth and meagre real wage increases — had suggested a pullback in spending was on the cards.”

Although the mood of retailers appears to have soured, they seemed to be more upbeat about the near-term outlook for the sector with a balance of 17 per cent expecting sales volumes to be up year-on-year in the run-up to Christmas.

The CBI monthly survey of distributive trades has a history of large swings but this month’s results follow data from the Office for National Statistics which reported that sales volumes increased by 1.2 per cent on the year but fell back 0.8 per cent in September compared to the previous month after gaining in August and July.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.