November 2007
Evidence of a continuing high street slowdown
has been published in the CBI's latest monthly retail survey
showing that growth in sales is at its slowest for almost
a year.
The survey showed 33% of retailers reported
a drop in year-on-year sales in the first half of October,
against 42% who said sales were up.
The rounded balance of +10% is the weakest
since November 2006 and, for the third month in a row below
the long-term average of +18%, indicating that the impact
of five interest rate rises in a year is now being felt by
consumers.
Sales were also weaker than predicted for
the second month in a row. Expectation remains hopeful again
for November (+15%), though sales are set to remain broadly
average for the time of year.
The three month average in sales volumes,
which tracks the underlying trend, continued its month-by-month
slowdown from May's peak of +36% to +12%, the lowest balance
since last December.
The CBI's October's Distributive Trades
Survey was conducted between 27th September and 17th October,
covering more than 20,000 outlets and 40% of retail jobs.
There were 146 respondents.
By sector, sales growth was mixed. Clothing
retailers again reported a drop on 12 months earlier (a balance
of -39%), with sales falling for five consecutive months.
This latest sharp fall in sales on a year ago could reflect
a reluctance to buy autumn ranges after a dreary summer and
now with relative warmth for the time of year. Meanwhile,
after five months of negative figures, durable household
goods saw a leap in sales.
Retailers' expectations for orders placed
with their suppliers were met exactly. After last month's
slight slowdown this is back in line with the growth rate
seen since June. November's orders are expected to ease again
slightly but still remain above the long-term average.
In wholesaling, after two months of unexpectedly
strong growth, 28% saw a drop in sales on a year ago against
40% who reported an increase (a lower than expected balance
of +12%). Boosted by the strength of sales in August and
September, the three month average was the highest seen since
March 1998 (both with a balance of +43%).
Wholesalers of industrial materials cited
the strongest year-on-year sales growth, with the balance
of +62 being the best since March 2006 (+66%).
Motor traders had an unexpectedly good month. The +33% balance reporting growth
is the highest since May 2004 (+34%), driven by sales of vehicles rather than
parts and accessories. However, sales were considered average for the time
of year, the strong balance being a reflection of last October's very weak
reading.
John Longworth, chairman of the CBI's distributive
trades panel and executive director at Asda said: "The
high street has seen another month of slower growth in retail
sales, and although some retailers are doing better than
others, it is clear that the buoyant trading period enjoyed
earlier this year has tailed off.
"Although slightly better sales are
expected in November, retailers' hopes have been disappointed
for the past few months, and they anticipate only subdued
growth in the important run-up to Christmas. As consumers
begin to feel the pinch, they will look to retailers who
offer them value for their money."
CBI chief economic adviser Ian McCafferty,
said: "The pace of growth in sales has consistently
slowed since the summer, showing that the five interest rate
rises are having an increasing effect on momentum as shoppers
tighten their belts.
"With added uncertainty about the
economy because of the credit crunch, we can expect this
slower pace to continue next year."
< back to News
headlines
