Warm weather boosts above average seasonal sales for retailers - CBI

While a heat wave is taking hold of the UK, the higher-than-average temperatures seem to have had a positive impact on shoppers, according to the Confederation of British Industry (CBI) with retailers benefitting from above-average seasonal sales and improved order volumes growth.

In the year to June since September 2017, the UK’s retail sales demonstrated growth at the fastest pace, based on the CBI’s latest monthly Distributive Trades Survey (DTS).  

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In particular, internet sales grew at a faster rate than the long-run average for the first time since January 2018 (although retailers expect growth to ease slightly in the year to July).

The survey conducted between 29 May and 13 June 2018, consisting of 106 firms (of which 45 retailers), also revealed that sales volumes were well above average for the time of year, following three months when they were below seasonal averages.   Additionally, the survey reported a jump in growth in the volume of orders placed on suppliers.

Retail sales growth was fairly broad-based across retail sub-sectors, with the pick-up in June driven particularly by a rise in non-store sales, department stores, durable household goods, and “other” normal goods. Grocers and hardware & DIY stores also fared well, reporting robust sales. Meanwhile, carpet & furniture stores and clothing retailers saw a drop in sales volumes in the year to June.

Anna Leach, CBI Head of Economic Intelligence, said:“Higher-than-average temperatures seem to have had a positive impact on shoppers, with retailers benefitting from above-average seasonal sales and improved order volumes growth. While today’s findings will bring some summer cheer to retailers, underlying conditions for the sector remain challenging – household spending remains under pressure from the slow recovery in real wage growth and the sector is still grappling with key structural changes like digital transformation.”   

Looking ahead, retailers expect growth in sales volumes and orders placed on suppliers to ease in the year to July. 

Elsewhere in the distribution sector, wholesalers reported flat sales volumes in the year to June (breaking 22 months of uninterrupted growth) – although firms expect growth to pick-up again in July. Motor traders continued to report modest sales volume growth, and they expect growth to accelerate sharply in July.

UK's Retail Sales Grow Slightly Faster than expected, says CBI

One word that sums up fashion of 2016 is nostalgia.  Despite rapid changes in world retail trends and technological developments, it has been a year of looking back to the past and reworking ideas taken from previous eras.

The prestigious Selfridges fashion department store on Oxford Street in London harks back to the Seventies for its shop windows this festive season.
Photos: Lucia Carpio

So much of the year-end reviews had been made in the context of a world dotted by upheavals.  No wonder people were feeling nostagic of better days of the past.  Let's hope that fashion in the coming year will begin to step away from the familiar and take us onto newer paths.

Meanwhile UK's retail sales growth accelerated in the year to December, with volumes rising at the fastest pace since September 2015, according to the CBI’s latest monthly Distributive Trades Survey.

The survey of 112 firms consisting of 53 retailers showed that sales volumes for the time of year were considered well above average, but growth is expected to slow somewhat in the year to January.

Separastely, orders placed on suppliers rose at the fastest pace in over a year, but are expected to be broadly stable in January.

The growth of retail sales volumes was broad-based, with sales of clothing continuing to perform strongly and grocers reporting the best results since January 2016.   Internet sales volumes continued to rise at a robust pace in the year to December, with the survey balance at its highest since November 2014.

Meanwhile, wholesaling reported the strongest volumes growth for almost a year-and-a-half in the year to December, with motor trades also seeing a healthy increase in sales volumes.

Ben Jones, CBI Principal Economist, said in late December:
“It’s encouraging to see retailers reporting another month of healthy sales growth leading up to the festive season, which rounds off a fairly solid quarter.
While we still expect to see decent growth in the near term, the pressures on retail activity are likely to increase during 2017, as the impact of sterling’s depreciation feeds through.
With higher inflation beginning to weigh on households’ purchasing power, consumption patterns are likely to shift, creating winners and losers across the retail landscape.”

Slower growth in UK predicted as dark cloud of uncertainty looms says business group

With one month to go before UK citizens vote on the EU Referendum, the latest CBI economic forecast predicts the UK economy will continue to grow – but at a slower rate – through 2016 and 2017, and there are signs that global economic risks weighing on investment plans.

The leading business group’s latest quarterly forecast predicts that the UK will see 2.0% GDP growth in both 2016 and 2017, both of which are downgrades from its last forecast in February (2016 – 2.3%, 2017 – 2.1%).

The CBI’s central economic forecast was carried out on the basis of UK’s current membership of the European Union. 

Growth is again expected to be driven by household spending and investment, but the deterioration in the global economic outlook, including weaker prospects for China and other emerging markets, continue to represent major challenges.

The economy saw a softer than expected start to the year, which has contributed to a large part of the downgrade in GDP growth in 2016. There are also signs that uncertainty over the outcome of the EU referendum is having a tangible impact on the spending plans of some firms.

Carolyn Fairbairn, CBI Director-General, said while they expect the UK’s growth path to continue but it is likely to be at a slower rate than previously thought.  A dark cloud of uncertainty is looming over global growth, particularly around weakening emerging markets and the outcome of the EU referendum, which is chilling some firms’ plans to invest.

The CBI which speaks on behalf of 190,000 businesses of all sizes and sectors in the UK, believes that the timing of a first rise in interest rates will now be in the second quarter of 2017 (rising to 0.75%) against the backdrop of slower growth.  However, a recovery in investment is expected in the second half of 2016, such that business investment remains a key support to GDP growth over the forecast period, accounting for around a quarter of growth in 2016, and a third in 2017.

Rain Newton-Smith, CBI Economics Director, said on the global front, momentum is tepid and the picture for some emerging markets remains weak. Growth among the Asian giants is likely to continue to outperform more advanced economies, but financial fragilities in China are still raising concerns.

“Once again, net trade is not expected to provide much support to growth. While the CBI expects a smaller drag in 2016 (-0.2ppts) relative to February (-0.5ppts), this mostly reflects a larger downgrade to import growth rather than much of a recovery in exports.”

According to the CBI, with offices includes the UK as well as representation in Brussels, Washington, Beijing and Delhi, growth in advanced economies around the world should continue at a steady, if subdued, pace over the next couple of years, with the forecast for US growth at 2.0% in 2016 (from 2.4% in 2015), rising to 2.3% next year. The recovery in the Eurozone should pick up a little further, with GDP growth at 1.6% in 2016 (from 1.5% in 2015). And while growth in China (6.5%) and India (7.4%) will outperform the advanced economies over the next two years, prospects for the rest of the emerging world remain weak and commodity exporters feel the hit from low prices.