AUGUST HEATWAVE COOLS RETAIL SALES GROWTH - CBI
The August heatwave was a turn-off for shoppers and caused a significant slowdown in retail sales growth, according to the CBI’s latest quarterly Distributive Trades survey. This was the first time since August 1995 that extreme heat appeared to affect sales.
The CBI sees this slowdown as a blip, pointing to retailers’ sales expectations for the year to September, which are the strongest for ten months with firms optimistic that the overall business situation will improve.
The survey shows that while grocers enjoyed strong sales - with shoppers buying cold drinks, ice cream and barbecue foods - stores selling clothing, footwear and leather goods reported disappointing sales. Forty one per cent of respondents said sales were up compared with the same month last year while 29 per cent said they were down. The balance of plus 12 per cent contrasts with plus 27 per cent growth recorded in July.
Stocks were run down to their lowest level since February 2001, following only modest growth in the volume of orders placed upon suppliers. Retailers are more optimistic about the overall business situation over the coming six months than at any time since May 2002. This is likely to reflect more upbeat expectations of sales growth as well as the fastest increase in prices since August 2001.
Retailers’ investment intentions turned positive for the first time in over a year. But there was no growth in the numbers employed in the year to August, for the first time since November 1998. Expectations for September are their weakest since November 1995.
Ian McCafferty, CBI Chief Economic Adviser, said: “The August heatwave proved to be a turn off for shoppers in some sectors. However, retailers’ strong expectations for September suggest the slowdown was just a blip. The upturn in investment for the first time in over a year is a healthy sign, but expectations of job cuts are disappointing.”
Improved performance in retailing over the past couple of months led to wholesalers reporting a second successive month of sales growth in contrast to prior expectations of a sharp drop. Sales were above average for the time of year and the underlying trend moved from negative to positive for the first time since May. A slight increase in investment is expected, however wholesalers reported sharp job cuts with more expected in September.
August saw motor traders achieve annual sales growth for the first time since July 2002 despite expecting a slight fall. September will be a key month with the introduction of the new registration plates and motor traders expecting sales to be up on last years’ figures.
3 September, 2003
Notes to Editors:The Distributive Trades Survey covers more than 20,000 outlets of firms responsible for 40 per cent of employment in retailing. It includes measures of sales activity across the distributive trades. It was first introduced in 1983 and the retail results form the UK component of the EC survey of retail trades. The survey was conducted between 30 July and 19 August 2003. There were 257 responses.
Media Contact:Sheila Murray, CBI Press Office, 020 7395 8090, sheila.murray@cbi.org.uk. Out of hours pager, 076 2680 9070.