British retail sales strong in October, with continued growth forecast, CBI

UK retail sales volumes in October continued to grow strongly, according to a report by the Confederation of British Industry (CBI) on Monday, with further steep rises expected in the months to come.

The CBI’s Distributive Trades Survey of 124 companies reported that retail sales have increased strongly for three successive months.

However, expansion was not uniform, with some sub-sectors doing better than others. Sales dropped below the average for this time of year, the CBI added.

Particularly strong growth was seen in the clothing and grocery sectors. Specialist foods & drinks, DIY and hardware, on the other hand, reported a decline in sales for the second successive month.

Suppliers reported a faster-than-expected pace of growth in the volume of orders, while stock adequacy rose significantly.

In the year to October, wholesaling sales carried on growing robustly. The survey authors added that the outlook for November is also good.

After slowing down steeply in September, motor traders posted accelerated sales growth in October.

Rain Newton-Smith

Rain Newton-Smith says retail growth appears to be more stable. (Photo courtesy of CBI)

CBI Director of Economics, Rain Newton-Smith, said:

“Sales on our high streets are still ticking along and, with similar prospects next month, retail growth is looking more stable. The clothing sector in particular appears to be bouncing back after the mild weather in September deterred people from buying their winter warmers.”

“The recent fall in inflation may help lift the spirits of households by making their budgets stretch further. But risks remain to the UK recovery more generally, with the Eurozone stalling, conflict in the Middle East and tensions over Ukraine. This could have an impact on consumer confidence and spending going forward.”

Key findings:

Forty-eight percent of retailers reported growing sales in the first nine months of the year, versus 17% who posted declines.

Growth varied considerably across sectors: Clothing +86%, Grocers +33%, Non-specialized +51%, Furniture/Carpets +72%, Pharmacies -55%, Specialist Food & Drink -24%, and Hardware & DYI -33%.

Thirty-four percent of companies said orders had increased compared to October 2013, while 22% said they fell.

The three-month moving average of sales growth came in at +33%, the highest in 3½ years.

Stock volume levels increased sharply further above “adequate” levels, relative to expected demand, thirty percent in October from +18% in September.

Forty-six percent of all retailers said they expected sales volumes to rise in the year to November, compared to 15% who predicted a decline.

Sixty-eight percent of wholesalers reported sales-volume increases in the year to October, compared to 13% who said they fell.

Thirty-three percent of motor traders saw sales volumes rise from the Jan-Oct period, versus 10% who posted declines. Most of them expect sales to fall in November.