Sharp decline in retail sales eases - CBI

Retail sales volumes fell for the fifth consecutive month in September, a survey by the Confederation of British Industry has found, but the rate of decline eased notably.

The latest CBI Distributive Trends Survey found that retail sales volumes in the year to September were -16, the fifth straight month of decline but a considerable improvement on August’s reading of -49. September’s reading was also well above the consensus of -25.

Orders contracted at a significantly slower pace in September, at -9 compared to -57 in August, although they remain below the long-run average of +9.

Sales were -11 compared to -6 in August, although the CBI noted: "Sales are expected to be broadly average for the time of year next month, [at] -2."

Rain Newton-Smith, chief economist at the CBI, said the data showed retailers were operating in "tough conditions".

She continued: "Add to this the pressures of sterling depreciation and the need to plan for potential tariffs and supply issues in the event of a no-deal Brexit, and you get a gloomy picture for the sector.

"Retailers are also grappling with ongoing challenges such as digital disruption and the cumulative burden of government policies. Reforming an outdated business rates system and a more flexible apprenticeship levy, which delivers better value for money, could really help to alleviate the pressure on retailers during these difficult times."

Furniture and carpet sellers were the only sectors to report unchanged volumes, with some of the biggest falls seen by clothing retailers and department stores.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The persistence of the CBI’s reported sales balance below its average level since 2012 [of] +12 signals that retailers remain under pressure.”

But he added: "The CBI’s survey repeatedly has pointed to a retail apocalypse this year that has not occurred. The small sample size likely is partly responsible for its misleading message; the CBI no longer discloses how many retailers take part, but numbers were declining earlier this year.

"Most of the retailers who respond are traditional high street retailers who are losing market share to online-only entrants.

"As a result, we continue to expect retail sales to grow at a steady 3% year-over-year over the coming months, given that consumer confidence is in line with its long-run average and real wages are rising briskly."

The CBI said year-on-year internet sales slowed slightly in September, at +33 compared to +37 in August, but were expected to improve to +41 in October.

Earlier on Wednesday, UK Finance said credit card spending had risen by just 1% year-on-year in August, to £11.0bn.