19 December 2019
The volume of retail sales was unchanged on the year for the second month in a row in December, following a period of declining annual sales in the six months up to October.
Sales volumes were nonetheless seen as poor for the time of year, despite discounting in the run up to Black Friday and Cyber Monday (both of which fell within the survey period this year).
Growth in internet sales slowed for a second consecutive month, with on-line sales rising at a pace that was well below the long-run average in the year to December.
Although retailers reported that stocks remained too high in December (in relation to expected sales), they made further progress running down inventories following a surge in the stock ratio to a record high in October, ahead of the Brexit deadline.
However, with stocks still flat, orders placed on suppliers fell for the eighth consecutive month in the year to December, though much less steeply than during the summer months.
Retail sales volumes are expected to remain flat in the year to January, while orders placed with suppliers are tipped to fall slightly further.
Rain Newton-Smith, CBI Chief Economist, said:
“Christmas is a critical time for retailers and these figures offer a mixed bag. While stagnating sales volumes in December are hardly something to cheer about, the figures at least provide hope that the recent period of falling sales has passed.
“After a difficult year marked by heightened economic uncertainty and shifting Brexit deadlines, retailers will be looking for a more stable operating environment in 2020. Business rates reform and better transport links to city centres will be at the top of Christmas wish lists for retailers. The new government can and must act swiftly to create the conditions for a revival of business confidence.”
Business conditions in other parts of the distribution sector were mixed. Wholesalers reported a fall in sales volumes in the year to December, in keeping with a generally less favourable trend since April this year. Sales were seen as poor for the time of year, stocks too high relative to expected sales and orders placed with suppliers fell for a second consecutive month. Wholesalers expect a further decline in sales in the year to January.
Meanwhile, motor traders reported flat sales in the year to December, with orders placed upon suppliers falling. However, both volumes and orders are expected to grow in the year to January.
According to the CBI’s December economic forecast, UK economic growth looks set to improve gradually from 2020, on the assumption that Brexit uncertainty diminishes and global growth revives. GDP is forecast to grow by 1.2% in 2020 (after estimated growth of 1.3% in 2019), with a somewhat brighter outlook for 2021, with growth picking up to 1.8%.
- Retail sales volumes were flat in the year to December (+0%) for the second month in a row (-3% in November), having fallen steadily over the previous six months. Retailers expect sales volumes to remain unchanged in the year to January (+1%).
- Orders placed on suppliers fell in the year to December (-10%), with a further slight decline in orders expected next month (-4%).
- The volume of sales was seen as poor for the time of year (-31%), but sales are expected to be slightly above average for the time of year next month (+5%).
- Internet sales growth slowed in December (+18%, from +25% in November), but is expected to pick-up in January (+31%).
- Wholesaling sales volumes declined in the year to December (-10%), for the third month in a row. Sales are expected to fall further in January (-18%).
- The volume of orders placed with suppliers also fell in December (-17%), with a similar decline expected in January (-19%).
- Motor traders’ sales volumes were flat in the year to December (+3%), with falling sales of vehicles (-11%) offset by rising sales of parts and accessories (+26%). Overall sales volumes are expected to increase in January (+20%).