Retail sales pick up but Brexit fears still loom large - CBI survey

The UK’s under-pressure high street saw a surprise pick up in sales in November – but expectations for the coming months have weakened as Brexit uncertainly continues.

According to the CBI Distributive Trades Survey for November, 36% of respondents said sales volumes in the year to November had picked up and 17% said they were down, giving a net balance of +19%, an improvement on October’s +5% and above most analysts’ forecasts of +10%.

A net +22% of retailers expect sales volume to pick up in December, the high street’s most important month.

However, sales remained below average for the time of year, and a balance of -9% expected their overall business situation to deteriorate over the next three months, the lowest reading since May 2017.

Investment intentions for the next 12 months, compared with the last 12 months to November, were -3%.

Anna Leach, head of economic intelligence at the CBI, said it was encouraging to see sales had strengthened in November.

But she added: “Business sentiment remains poor, investment intentions are flat and headcount continues to decline.

“What’s needed now is securing a transition period that will remove a calamitous no-deal cliff edge and provide firms with breathing room. The withdrawal agreement is hard-won progress – let’s not go backwards.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The survey covers only the first half of the month, so it [misses] the make-or-break Black Friday sales period. Growth in the official measure of retail sales might be stronger than implied if more shoppers than usual delayed making purchases until Black Friday.

“That said, retailers were cautious about the near-term outlook; indeed, the balance of retailers expecting sales to rise next month was lower than in any other November since 2011. The recent dip in consumer confidence, linked to Brexit uncertainty, might lead to particular weakness in big ticket sales.”

The CBI surveyed 104 firms, 47 of which were retailers.