UK retail sales 'broadly average' in May - CBI

UK retail sales returned to more normal levels in May following a big jump in April after non-essential retailers were allowed to reopen, according to a survey released on Tuesday by the Confederation of British Industry.

Retailers reported that sales volumes were "broadly average" for the time of year, with a balance of -3 in May from +16 in April. The reported sales balance declined to +18 in May from +20 the month before, coming in below consensus expectations of +25.

CBI economist Ben Jones said the fact sales were in line with seasonal norms is a definite improvement from earlier in the year, but that this month’s survey is perhaps "a touch disappointing" after April’s stronger results.

"Some retailers have suggested the increase in demand after the initial reopening of non-essential retail in early April was either short-lived or less strong than expected. And non-store sales remain well above seasonal norms, suggesting that some consumers who migrated to online shopping during the pandemic have not fully shifted back to old habits," he said.

"As the economy moves toward a new normal, it’s clear that the pandemic has exacerbated pre-existing challenges for some retailers. The trend away from bricks-and-mortar retail has accelerated, while rent arrears and accrued debts have added to the cumulative burden of costs. The lockdown may be over, but its impact on the sector will be felt for a good while yet."

Pantheon Macroeconomics said the CBI survey sets a relatively sombre tone after April’s "blowout" retail sales figures.

"Other data present a more upbeat picture," said UK economist Samuel Tombs.

"For instance, credit and debit card payments settled through the CHAPS system were just 3% below their February 2020 level in the seven days to May 13, improving on the 7% average shortfall in April, according to the Bank of England. The relative weakness of the CBI’s survey might be because its sample often overweights high-street retailers and under-represents online-only retailers.

"Note too that the survey was conducted between April 28 and May 17, so it has not captured any possible pick-up in retail sales on the back of the full reopening of the hospitality sector on May 17."