Retailers upbeat as festive shopping season gears up - CBI

The decline on the UK high street eased in November, halting a six-month trend and building expectations for the key festive period, a survey showed on Monday.

The latest distributive trades survey from the Confederation of British Industry reported broadly unchanged sales volumes in November following six consecutive months of declining annual sales. The reported sales balance rose to -3 from -10 in October, the highest balance in seven months and well above consensus for -11.

Furthermore, retailers said they expected growth to return in the year to December, with their strongest expectations in seven months. There was a positive net balance of +21 among respondents asked about sales expectations, compared to +1 in October.

Sales were seen as above average for the time of year to the greatest extent since April: 38% reported sales for the time of year as good, and 30% as bad, giving a balance of +8. This was expected to improve to +15 in December.

Anna Leach, CBI deputy chief economist, said: "Retailers are entering the festive season with a bit of hope that sales will head up, with the strongest expectations in the half a year. Actual sales have also stabilised and have budged above average for the time of year. And employment has stopped failing after three years of decline.

"But Brexit uncertainty continues to weigh on investment plans for the year ahead, which remain weak."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The pick-up in the reported sales balance in November, to its highest level since April, is a tentatively encouraging sign that retail signs have regained momentum."

Tombs argued that the CBI report was no longer the bellwether it once was, however. "The survey has had a very poor relationship with the official data lately, due to its declining sample size and bias towards traditional high-street retailers, which are losing market share.

"Note too that the survey focuses only on the first two weeks of the month, which is a particularly glaring weakness this month with Black Friday falling on 29 November.

"Overall, we still expect growth in households’ spending to remain robust enough over the coming quarters to steer the economy away from recession, but November’s CBI survey increases our conviction level only slightly."

The CBI said grocers made the greatest positive contribution to the headline figure in November, while negative contributions came from non-specialist stores and clothing.

Internet sales growth in the year to November eased to the slowest pace since June and are expected to remain at this below-average pace next month.

The survey was conducted between 28 October and 13 November. Of the 104 firms surveyed, 52 were retailers, 46 were wholesales and six were motor traders.