Here’s why
Retail sales growth accelerated in the year to April, with volumes rising faster than expected, according to the latest monthly CBI Distributive Trades Survey.
The survey of 112 firms, of which 57 were retailers, showed that the volume of sales grew at the fastest pace since September 2015 in the year to April, with orders placed on suppliers rising at the strongest rate for a year-and-a-half. Overall, sales for the time of year were considered to be slightly above seasonal norms.
Looking ahead, however, volumes growth is expected to slow in the year to May and sales are tipped to be broadly average for the time of year, with orders expected to be largely unchanged.
Within the retail sector, the clothing and grocer’s sectors performed particularly strongly, whilst retailers of furniture & carpets and specialist food & drink stores reported a second consecutive month of falling sales.
Internet sales continued to grow at a solid pace in the year to April, in line with the long-run average, and are expected to grow at a broadly similar pace in May.
Meanwhile, wholesaling saw robust growth in sales volumes in the year to April, while motor trades reported slowing sales, more rapidly than expected.
Ben Jones, CBI Principal Economist, said: “Retail sales held up better than expected, especially considering that the Survey did not cover the Easter period. The warm weather in early April might go some way to explaining the uptick, with sales by clothing shops and grocers driving overall growth.”
“However, retailers are still cautious over the outlook, expecting slower growth over the year to May, as higher inflation eats into household spending. With price competition remaining fierce and rising costs squeezing margins, retailers face mounting pressures in the months ahead.”
Key findings
Retailers:
- 59 per cent of retailers said that sales volumes were up in April on a year ago, whilst 21 per cent said they were down, giving a balance of +38 per cent. This outperformed expectations (+16 per cent), and was the highest balance since September 2015 (+49 per cent)
- 37 per cent of respondents expect sales volumes to increase next month, with 21 per cent expecting a decrease, giving a balance of +16 per cent
- 32 per cent of retailers placed more orders with suppliers than they did a year ago, whilst 21 per cent placed fewer orders, giving a balance of +18 per cent. This was the highest since October 2015 (+19 per cent)
- 33 per cent of retailers reported that their volume of sales for the time of year were good, whilst 20 per cent said they were poor, giving a balance of +13 per cent
- Internet sales volumes continued to expand at a healthy pace (+48), with growth broadly in line with the long-run average. Internet sales volumes are expected to grow at broadly similar pace in the year to May (+47)
- Sales volumes grew strongly in clothing (+97 per cent – the highest since September 2010), and grocers (+40 per cent). Meanwhile sales volumes decreased in specialist food & drink (-43 per cent) and furniture & carpets (-30 per cent).
Wholesalers:
- 69 per cent of wholesalers reported sales volumes to be up on last year, and 6 per cent said they were down, giving a balance of +63 per cent, and beating expectations (+44 per cent). Volumes are expected to grow at a slower pace next month (+8 per cent)
- The volume of orders placed upon suppliers accelerated (+53 per cent, from +31 per cent in March), but is expected to be broadly flat in the year to May (-1 per cent).
Motor traders:
- 45 per cent of motor traders reported sales volumes were up on a year ago, whilst 26 per cent said they were down, giving a balance of +19 per cent. This was below expectations (+31 per cent) and follows exceptionally strong growth in March (+74 per cent). Volumes growth is expected to pick again next month (+27 per cent).
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