Hopes of a pick-up in consumer spending over the vital Christmas trading period have been boosted by data that suggests that the prolonged decline in retail sales has eased.
In the latest CBI Distributive Trends survey, retailers reported broadly unchanged sales volumes in the year to November after six consecutive months of declining annual sales. 41% of retailers still reported a decline in sales while 38% of respondents saw a rise. However, the balance of -3 was the highest in 7 months.
More encouragingly, a positive balance of 21% of retailers expect sales volumes to increase in the year to December.
Meanwhile, the majority of firms expected business conditions to remain stable over the next three months. However, orders placed upon suppliers fell for the seventh consecutive month and most retailers are once again planning to spend less on investment next year than they did this year.
By sector, grocers made the greatest positive contribution to the headline figure this month, with negative contributions coming primarily from non-specialised stores, but also clothing and non-store retail. Meanwhile, internet sales growth in the year to November eased to the slowest pace seen since June and is expected to remain at this below-average pace next month.
Anna Leach, CBI Deputy Chief Economist commented: “Retailers are entering the festive season with a bit of hope that sales will head up, with the strongest expectations in half a year. Actual sales have also stabilised and have nudged above average for the time of year. And employment has stopped falling after three years of decline. But Brexit uncertainty continues to weigh on investment plans for the year ahead which remain weak.
“As the election period gets into full swing, retailers will welcome the prominence being given to fixing the broken business rates system. But it will be up to the next Government to turn warm words into action.”
