Sales growth continues on high street, says CBI

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Ian McCafferty: strong crucial Christmas trading

Sales on the high street are continuing their upward trend, with strong year-on-year growth in the first half of December, according to the latest CBI Distributive Trades Survey. Growth is expected to slacken slightly in January, however.

The survey showed for December, 67% of retailers said sales were higher than a year ago, while just 11% said they were lower, giving a balance of +56%, the highest figure since April 2002 (+57%). This means there have now been six months of strong sales figures in a row since July.

The sub-sectors with the strongest sales growth were hardware and DIY, clothing and non-specialised retailers such as department stores, and grocers.

The balance for the three month moving average edged higher to +45%.

However, retailers anticipate slower growth next month, with a balance of +35% expecting volume of sales to be higher than a year ago.

The balance for the volume of orders placed upon suppliers is +52%, although the balance for next month of +24% suggests a slower rate of growth.

Ian McCafferty, CBI chief economic adviser, said: “Sales on the high street continued to rise strongly compared with a year ago, reflecting a stronger crucial pre-Christmas trading period.

“However, December’s strong survey balance is also likely to capture spending being brought forward, ahead of the January increase in VAT. Indeed, retailers expect sales growth to lose some momentum in the New Year. We remain cautious about prospects for the retail sector further ahead, given ongoing uncertainty over the resilience of consumer spending.”

In motor trades, the volume of sales was also higher than a year ago, with a balance of +15%. However, there are concerns about January with just 7% expecting sales to be higher than a year ago and 49% expecting them to be lower, giving a rounded balance of -43%.

Among wholesalers, the situation is also more difficult. While 19% of wholesalers said the volume of sales rose compared with a year ago, 31% said they fell, giving a rounded balance of -13%. The balance for the three-month moving average was +3%.

However, wholesalers are more optimistic about next month, with a balance of +25% expecting sales to be higher in January on a year ago.

The survey was conducted between 25 November and 8 December, and 121 firms participated.