UK September retail sales strong, fashion drives increase – CBI survey
UK retail sales continue to surprise this year. They unexpectedly surged to a two-year high in early September, according to the latest survey from the Confederation of British Industry (CBI) Wednesday. Clothing retailers and grocers were the best-performing sectors this month, the CBI noted.
Overall, they jumped to a reading of +42 from -10 in August as the survey of 117 respondents, including 55 retailers, found that sales for the time of year were “slightly above seasonal norms.” Orders placed with suppliers also rose and retailers expect continued growth in sales and orders in the year to October, the highest month-ahead expectations since the start of the year.
Fashion, with a reading of +75% (the percentage of retailers that saw growth rather than sales rising by that amount) pointing to a good start to the autumn/winter selling season.
However, furniture and carpets carpet retailers recored a -18% score and sellers of recreational goods (-33%) reported falling sales volumes over the year to September.
Growth in e-tail volumes rose in the 12-month period and are expected to expand further, albeit more slowly, next month. Internet sales volumes rose at a faster pace than in the previous month (with a reading of +54%, compared with +34% in August), and above the long-run average (+48%).
Overall, 56% of retailers said that sales volumes were up in September compared with a year ago, while 15% said they were down, giving that balance of +42%. Some 37% of respondents expect sales volumes to increase next month, with 14% expecting a decrease, giving a balance of +23%.
The latest overall CBI figures, which are prone to wide fluctuations, took everyone by surprise, especially analysts. But they cautioned about the significance of the data, with the outlook for the country’s departure from the European Union still unclear and inflation continuing to squeeze household budgets.
“With the pressure on incomes set to persist, retailers will continue to face a challenging environment,” CBI economist Anna Leach said.
“The robust CBI survey will likely fan belief that the Bank of England (BoE) could very well raise interest rates… as soon as November,” added Howard Archer, chief analyst for consultants EY Item Club.
The figures suggested gross domestic product growth would pick up to 0.4% in Q3, from 0.3% in the three months to June, he added.
The BoE has said most of its policymakers expect to back a first rate rise in more than a decade “in the coming months” if the economy and inflation pressures grow as they expect.
Archer said the strength in September’s CBI data partly reflected a snap back from weakness in August. Other official data have shown British retail sales volumes in August recorded their biggest monthly gain since April, although year-on-year sales growth remained well below last year’s levels.