Retail sales fall at near-record pace - CBI

Retail sales fell at a near record pace in May as the sector was hit by a second month of the Covid-19 lockdown that closed all but essential stores, a Confederation of British Industry survey showed.

The pace of decline slowed slightly from April which was the joint-worst month on record. Sales volumes are expected to fall at a slightly slower pace in June but still at a historically rapid pace, the CBI said.

Sales volumes registered a -50 balance between retailers whose sales rose and those where sales fell, the CBI distributive trades survey found. The slight easing of the decline from -55 in April was caused by a return to growth for the grocery sector while non-food retailers had no recovery.

Investment intentions in the wider distributive sector for the year ahead fell at their fastest rate since the survey began in 1983 and employment fell at the quickest pace for 10 years. More than half of retailers reported temporarily laying off workers while the number of permanent job cuts was unchanged.

Rain Newton-Smith, the CBI's chief economist, said: “The retail sector is at the sharp end of a crisis, with many businesses up against it. The government’s support packages are making a real difference, with more shops reporting that jobs have been furloughed, rather than lost. The furlough system will need to adapt as more businesses open their doors in the months ahead."

Orders placed with suppliers fell at a near-record pace. Stock levels in relation to expected sales hit their highest level since October 2019. Optimism about the general business situation fell at the fastest pace since the 2008 financial crisis.

The government has said all non-essential shops will be allowed to reopen on 15 June, almost three months after they were forced to close to stem the rate of Covid-19 infections. The CBI survey showed a range of pressures including goods shortages, cost pressures and shipping delays as stores prepare to reopen in the deepest recession since the second world war.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "A broad-based recovery will have to wait until after June 15, when all non-essential shops will be allowed to re-open. Even then, consumers’ spending in shops will likely be well below pre-virus levels, given the lingering risk of contracting Covid-19 and the recent surge in unemployment, which has hit households’ overall income and will make those working less willing to purchase discretionary goods."