November 2007
Evidence of a continuing high street
slowdown has been published in the CBI's latest monthly
retail survey showing that growth in sales is at its slowest
for almost a year.
The survey showed 33% of retailers reported
a drop in year-on-year sales in the first half of October,
against 42% who said
sales were up.
The rounded balance of +10% is the weakest
since November 2006 and, for the third month in a row
below the long-term
average of +18%, indicating that the impact of five
interest rate rises in a year is now being felt by consumers.
Sales
were also weaker than predicted for the second month
in a row. Expectation remains hopeful again for
November
(+15%), though sales are set to remain broadly average
for the time of year.
The three month average in sales
volumes, which tracks the underlying trend, continued
its month-by-month
slowdown from May's peak of +36% to +12%, the lowest
balance since
last December.
The CBI's October's Distributive
Trades Survey was conducted between 27th September and
17th October,
covering more
than 20,000 outlets and 40% of retail jobs. There
were 146 respondents.
By sector, sales growth
was mixed. Clothing retailers again reported a drop on
12 months earlier (a
balance of -39%),
with sales falling for five consecutive months.
This latest sharp fall in sales on a year ago
could reflect
a reluctance
to buy autumn ranges after a dreary summer
and now with relative warmth for the time of year.
Meanwhile,
after
five months of negative figures, durable household
goods saw a leap in sales.
Retailers' expectations
for orders placed with their suppliers were met exactly.
After last
month's slight
slowdown this
is back in line with the growth rate seen
since June. November's orders are expected to ease
again slightly
but still remain
above the long-term average.
In wholesaling,
after two months of unexpectedly strong growth, 28% saw
a drop in sales on
a year ago against
40% who reported an increase (a lower than
expected balance of +12%). Boosted by the
strength of
sales in August
and
September, the three month average was
the highest seen since March 1998 (both with
a balance of
+43%).
Wholesalers of industrial materials
cited the strongest year-on-year sales growth,
with the
balance of
+62 being the best since March 2006 (+66%).
Motor traders had an unexpectedly good
month. The +33% balance reporting growth
is the
highest since
May 2004
(+34%), driven by sales of vehicles rather
than parts and accessories. However,
sales were considered
average
for
the time of year, the strong balance
being a reflection of last October's
very weak
reading.
John Longworth, chairman of the
CBI's distributive trades panel and executive
director at
Asda said: "The high
street has seen another month of slower
growth in retail sales, and although
some retailers are doing better than
others, it is clear that the buoyant
trading period enjoyed earlier this year
has tailed off.
"Although slightly better
sales are expected in November, retailers'
hopes have been disappointed
for the past few months, and they anticipate only subdued growth in the
important run-up to Christmas. As consumers
begin to feel the pinch, they will look to retailers who offer them value
for their money."
CBI chief economic adviser
Ian McCafferty, said: "The
pace of growth in sales has consistently
slowed since the summer, showing that the five interest
rate rises are having
an increasing effect on momentum as
shoppers tighten their belts.
"With added uncertainty
about the economy because of the
credit crunch, we can expect this
slower pace to continue next year."
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