Retail sales growth expected to slow after summer bounce
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Version 0 of 1. Warmer weather and an influx of tourists helped retailers recover from their post-Brexit blues, but there are clear signs that sales are expected to slow in the autumn. The CBI distributive trades survey, a monthly health check of retailers and wholesalers, found that they enjoyed their best month in August for six months as shoppers bagged summer clothing bargains. The retail sales volume index rose to +9, its highest since February and a strong recovery from -14 in July. Anna Leach, the CBI’s head of economic analysis, said sales in September were likely to moderate as the expected sales index could only reach +3 for next month, from -12 in August. “The summer weather has brought shoppers out on to the high street, with retailers reporting that sales growth has risen, outdoing expectations, although firms do expect sales growth to ease next month,” she said. In a telltale sign of the outlook for the industry, the CBI said retailers had been consistently cutting orders to wholesalers for the past six months. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said last month’s dive in the CBI index was out of line with the official figures from the Office for National Statistics, which showed retail sales leapt 1.4% month-to-month. “The survey’s narrow scope – August’s survey included just 58 retailers, who reported results only for the period between 27 July and 12 August – means it often gives a misleading steer,” Tombs said. “Away from the high street, there are clear signs that consumers are slowing down; falling new car registrations and declining mortgage approvals show households are shying away from big-ticket purchases. “Looking ahead, we continue to expect growth in overall spending to slow sharply, as inflation picks up in response to sterling’s depreciation and firms scale back hiring,” he added. Howard Archer, chief UK economist at IHS Global Insight, said that although workers were still in a good position, with wages outstripping inflation and the jobs market remaining buoyant, the outlook was less rosy. “The concern is that the fundamentals for consumers will soften appreciably over the coming months, thereby weighing down on spending,” he said. “Consumers are likely to face less favourable purchasing power as inflation rises and earnings growth is limited by companies striving to limit their costs. In addition, unemployment seems seem likely to rise over the coming months.” |