SALES GROWTH SLOWING BUT EMPLOYMENT INCREASES STRONGLY – CBI SURVEY

SALES GROWTH SLOWING BUT EMPLOYMENT INCREASES STRONGLY – CBI SURVEY

SALES GROWTH SLOWING BUT EMPLOYMENT INCREASES STRONGLY – CBI SURVEY

Retail sales growth slowed again in the year to November and orders fell for the first time since April 2015, but firms have been recruiting at their strongest rate for 17 years and expect sales to recover next month.  That’s according to the CBI’s latest quarterly Distributive Trades Survey.

The survey of 117 firms consisting of 58 retailers showed that retail sales growth slowed for a second consecutive month, failing to meet expectations of stronger growth.  Orders placed on suppliers fell for the first time since April 2015, but sales were regarded as narrowly above average for the time of year.

Growth is expected to recover in December during the Christmas period and recruitment to remain robust.  Average selling prices are also expected to stabilise, after falling back once again on a year ago in the year to November.

Investment intentions for the year ahead remain positive for a second consecutive quarter, albeit ticking down. Internet sales volumes growth held broadly steady in the year to November, with growth set to pick up next month.

Rain Newton-Smith, CBI Director of Economics said:

“After a stronger showing earlier in the year, retailers will naturally be disappointed by the unexpected slowing in sales growth in November, which may be related to the mild start to the autumn.

“Nevertheless, it’s encouraging that retailers have been boosting employment and we expect that trend to continue.  High street conditions remain competitive, with many sectors still cutting prices to attract customers, but ongoing improvements in wages combined with low inflation should continue to support household spending.”

Retailers

Key findings:

  • 38% of respondents reported that sales volumes were up on a year ago, while 31% said they were down, giving a balance of +7%, significantly below expectations (+24%).
  • Retailers expect sales volumes growth to pick up next month (+31%), with 48% expecting them to rise and 17% to fall.
  • Volumes of sales for the time of year in November were marginally above seasonal normal levels (+4%).
  • 38% of firms said they had increased their headcount, while 9% said it had fallen, giving a balance of +29% (the highest since November 1988, +34%). Jobs are expected to increase at a slightly slower pace in the year to December (+24%).
  • The volume of internet sales grew at a steady pace in the year to November (+35%).  Survey respondents expect growth in internet sales to pick up in December (+51%).
  • Some sub-sectors recorded sales volumes falling over the year to November, such as specialist food and drink and grocers, with the former posting its lowest survey balance since May 2012.
  • The volume of orders placed upon suppliers fell (-8%), with 28% of survey respondents reporting a rise and 36% reporting a fall.  Firms do anticipate a rise next month (+8%), with 26% expecting an increase and 19% a decrease.
  • Stocks relative to expected demand ticked higher (+20%), returning towards its long run average (+17%).
  • Retailers expect their overall business situation to continue to improve over the next three months (+11%), although at a slower pace than in the previous quarter (+22%).
  • Investment intentions over the next year compared to the previous twelve were positive (+5%) for a second consecutive quarter, but weakened on the previous quarter (+17%).
  • Average selling prices fell on a year ago (-7%) for a second quarter running.

Wholesalers

45% of wholesalers reported sales volumes to be up on last year and 24% said they were down, giving a balance of +21% – an improvement on the previous month (-3%).

Motor traders

39% of motor traders reported sales volumes to be up on last year and 7% said they were down, giving a balance of +32%.

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