Retail sales rise year-on-year in July but growth slows, CBI survey shows

High street retailers reported a third consecutive month of rising year-on-year sales and orders in July 2012. However, growth slowed to a greater extent than had been expected, the CBI said today (Monday).

In the CBI’s latest monthly Distributive Trades Survey, covering the first two weeks in July 2012, 44% of retailers stated their sales volumes were up on a year ago, while 33% reported a fall. The resulting balance of +11% was weaker than retailers had anticipated (+32%) for July. Firms also reported growth in orders (+5%), although once again at a much slower pace than had been expected (+21%).

In August 2012, retailers expect both sales and orders growth to moderate further, with both expected to be effectively flat on a year ago (sales +3%, orders -1%).

As well as seeing slower growth, sales continued to be below average for the time of year (-14%), while, relative to expected demand, stock levels also rose (+21%, from +11% in June).

Many retail sub-sectors saw an increase in year-on-year sales growth, notably furniture and carpets (+62%), clothing (+56%), footwear and leather (+42%), and grocers (+47%). But reflecting the headline trend, all of these sectors saw sales growth slow compared to last month.
Judith McKenna, chair of the CBI Distributive Trades Panel and Asda chief operating officer, said: “Retailers reported an annual rise in sales and orders for the third month in a row, but the increase was far slower than firms had anticipated.

“The unprecedented poor weather for the time of year did not help, but retailers also expect conditions to remain tough during August. With consumer confidence weak and wage growth remaining sluggish, the longer term outlook for retailers remains challenging.”

Only 18% of wholesalers reported a rise in the volume of sales, while 30% saw a fall. The resulting balance of -12% was the first fall in sales since November 2011.

Motor traders’ sales volumes were broadly flat in the year to July (-1%), significantly below expectations of growth (+38%).