Retailers upbeat about high street trading

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Sales on the high street were higher than a year ago in October, according to the latest CBI monthly Distributive Trades Survey. The figure was positive for the fourth month in a row, and retailers predict a slightly faster increase in sales next month.

The survey showed that 58% of retailers said the volume of sales rose during October, while 22% said it fell, giving a balance of +36%. This was lower than the expected +47%, and September’s balance of +49%.

A balance of +20% of retailers said sales were above average for the time of the year – the highest balance since May 2007 (+21%).

As in previous month, the clothing and footwear and leather sub-sectors saw particularly rapid sales growth, whereas sales of durable household goods saw a slower increase (+22%), after four months of stronger growth. Sales in sub-sectors including chemists and hardware and DIY were lower than a year ago.

Looking to November, a balance of +43% of retailers expect a higher volume of sales than a year ago.

Lai Wah Co, CBI head of economic analysis, said: “High street sales in aggregate have performed well again this month, but sales of durable household goods have slowed noticeably, in line with more subdued housing market activity of late.

“Retailers expect sales growth to continue next month, in the run-up to Christmas. We should also see more of a boost to sales as shoppers look to beat the New Year VAT rise, but looking beyond that, broader consumer caution may temper growth in spending into 2011.”

Volumes of orders placed upon suppliers rose strongly on a year ago for the fourth consecutive month (+30%), although this was slightly below last month’s prediction of +40%.

Volumes of stocks increased in relation to expected demand in October (+22%), the highest balance since April 2009 (+22%). Stocks adequacy is now back above its long-run average (+18%) after falling below this last month.

In wholesaling, sales volumes were broadly flat in October contrary to expectations of growth. A balance of +3% of wholesalers said volumes were higher than a year ago, with the same figure expected next month. A balance of +8% of firms said sales were above average for the time of year.

In motor trades, the volume of sales rose on a year ago (+15%), which was broadly in line with expectations (+18%). Next month, sales growth year-on-year is expected to continue (+13%).