WIREDGOV

In the year to February, retail sales volumes were broadly unchanged following last month’s contraction, according to the latest CBI Distributive Trades Survey. Next month, sales volumes are expected to fall again.

Retailers continue to be gloomy about their business situation over the next three months but are less pessimistic than last quarter. Price growth remains near multi-decade highs, and retailers expect headcount to decline again next month.

The key survey findings included:

• Retail sales volumes were broadly unchanged in the year to February (weighted balance of +2% from -23% in January), but are expected to fall again next month (-18%).
• Retailers report that sales were good for the time of year (+6% from -3% in January). Sales volumes are expected to exceed seasonal norms to a slightly greater extent next month (+11%).
• Whilst retailers expect their business situation to deteriorate over the next three months (-6%), they are less pessimistic than last quarter (-22%).
• Price growth in the year to February remained near multi-decade highs (+80% from +82% in November). Next month, prices are expected to continue to increase at this rapid pace (+80%).
• In the year to February, retail employment declined for the second quarter in a row (-12% from -17% in November). Retailers are expecting headcount to continue to contract next month (-16%).
• Retailers’ investment intentions have improved since November but remain negative overall. (-16% from -38%).

Martin Sartorius, CBI Principal Economist, said:

“Whilst retail sales volumes were largely unchanged in the year to February and slightly above seasonal norms, firms remain pessimistic about their business outlook and are bracing themselves for yet another fall in sales next month.

“At the upcoming Spring Budget, the Government must take action to tackle the roadblocks in the way of the UK’s economic growth. Retailers are now looking for action in areas like skills and investment. Transforming the Apprenticeship Levy into a “Skills Challenge Fund” and incentivising businesses investment through introducing a successor to the super deduction will be crucial for improving our economic prospects.”

 In addition, data showed:

• The pace of decline in retail internet sales accelerated in the year to February (-30% from -4% in January). Next month, the contraction in internet sales is expected to ease slightly (-24%).
• In the year to February, retailers reported that orders placed upon suppliers declined – but at a slower pace than last month (-25% from -32% in January). Orders are expected to fall at a broadly similar pace next month (-23%).
• Relative to expected sales, retail stocks were seen as elevated, but to a lesser extent than last month (+8% from +23% in January).
• Elsewhere in the distribution sector, wholesalers reported that sales in the year to February fell more steeply than last month (-28% from -18% in January), with the pace of decline expected to moderate next month (-22%).Motor traders’ sales volumes in the year to February declined at the slowest rate since June 2022 (-15% from -34% in January). Sales are expected to be broadly unchanged next month (-2%).

This survey included 136 companies, including 59 retailers.