UK Summer Retail Sales Flat, Outlook Also Weak | kbnmart

UK retail sales have been weak throughout the summer and the outlook remains weak, according to new figures. But the picture appears to be improving, according to the latest monthly survey of the distribution sector by the Confederation of British Industry.

Headline retail sales volumes fell for the third month in a row in the year to August, although the survey doesn’t tell us by how much. It simply shows a weighted balance of retailers who saw sales fall. So the figure there was -27%, which was better than the -43% reading in July, but still the second weakest since April.

But retailers expect the sales decline to ease further in September with a weighted balance of -17% here.

Sales at this time of year were reported to be “weak” in August, but to a lesser extent than the previous month (-21% from -36% in July). Sales volumes are expected to remain depressed next month (-18%).

Retailers also expect a moderate deterioration in their business situation over the next three months (-13% compared to +2% in May).

Retail orders from suppliers continued to fall over the year to August, at roughly the same pace as last month (-42% from -40% in July). Orders are expected to fall again next month but at a more moderate rate (-27%).

Retailers also reported that inventory levels were “very high” compared to expected sales in August, but to a lesser extent than last month (+14% from +32% in July). Inventory positions are expected to remain flat next month (+18%), according to the report.

Digital sales volume shrank at a “moderate pace” in the year to August (-15% from -7% in July) and are expected to fall at a faster rate next month (-30%).

Meanwhile, retail selling price inflation is expected to remain below the long-run average next month, while future investment and employment plans are expected to be scaled back.

“Retailers reported increased caution in their investment and hiring plans, which appeared to reflect concerns about persistently weak demand,” said Martin Sartorius, chief economist at the CBI. “While households are still feeling the pinch from the cost of living crisis, businesses are expected to gradually start to see some tailwinds from rising real consumer incomes.”

“The sector wants to see measures in the Budget this autumn to provide certainty for businesses and stimulate investment. Reforming business rates, providing a roadmap for business tax and changing the apprenticeship levy would help businesses deliver on the government’s ambitions to boost the economy,” he added.