22 February 2018
Orders placed on suppliers were broadly flat over the year, but are expected to pick up slightly next month. Within the retail sector, growth in sales volumes was recorded in the grocers, hardware & DIY, and non-store goods (i.e. internet and mail order) sub-sectors. Meanwhile sales fell in clothing, footwear & leather, department stores, and furniture & carpets.
Growth in average selling prices remains above the long-term average in the year to February, but eased compared with the previous quarter. Similar price growth is expected in the year to March.
Alongside slower sales growth, employment in the retail sector continued to decline for the fifth quarter in a row, but at the slowest pace in a year. But for the first time since November 2016, retailers expect their business situation to improve over the next three months. And investment intentions for the year ahead strengthened further, hitting their highest since August 2015.
Looking at growth in the economy more broadly, momentum was modest for most of 2017. Much of this reflected the weakness in household income, which is a factor behind weaker retail sales growth over the past year. We expect similarly subdued GDP growth to persist further ahead – for more detail, see our latest economic forecast.
Anna Leach, CBI Head of Economic Intelligence, said:
“While trading conditions remain tough, it’s encouraging to see retailers’ investment intentions improving to their highest since August 2015, in addition to signs of renewed business optimism for the first time in more than a year.
“With labour-intensive businesses such as retailers finding it increasingly difficult to find workers, agreeing a jobs-first transition between the EU and the UK, in writing, by the end of March would provide some much-needed certainty.”
- 32% of respondents reported that sales volumes were up on a year ago in February, while 24% said they were down, giving a balance of +8%
- Retailers expect sales volumes to pick up again next month (+21%), with 34% expecting them to rise and 13% to fall
- Sales were slightly above average for the time of year in February (+4%), with the balance a little above the long-run average (-1%)
- The volume of orders placed upon suppliers was broadly flat in the year to February, with 31% of survey respondents reporting a rise and 28% reporting a fall, giving a rounded balance of +3%. Firms anticipate that orders growth will pick up next month (+9%)
- Retailers expect their overall business situation to improve slightly over the next three months (+4%), for the first time since November 2016
- Investment intentions for the next 12 months compared with the last 12 months in February (+16%) were at their highest since August 2015 (+17%)
- Average selling prices growth slowed in the year to February (+52%) compared with the previous quarter, when it had risen to its highest since 1991. Price growth is expected to accelerate slightly next month (+60%)
- Year-on-year growth in internet sales volumes (+45%) eased slightly from last month (+55%)
- Grocers reported strong sales volumes growth in the year to February (+65%), while robust growth was also reported in other sub sectors, such as non-store goods (i.e. internet and mail order) (+67%) and hardware and DIY (+46%).
- However, this was partly offset by falling sales in department stores (-45%), clothing (-77%), furniture & carpets (-36%) and footwear & leather (-57%)
- 53% of wholesalers reported sales volumes to be up on last year and 15% said they were down, giving a balance of +38%.
- 70% of motor traders reported sales volumes to be up on last year and 17% said they were down, giving a balance of +53%.
The February 2018 CBI distributive trades survey was conducted between 29 January and 14 February.