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February sales volumes strengthened but growth slowed, says CBI

Retailers saw sales volumes continue to strengthen on a year ago in the first half of February, although the pace of growth slowed once again, the CBI said.

The CBI’s latest quarterly Distributive Trades Survey, which covers the first two weeks of February, revealed that 37% of retailers saw an increase in their volume of sales in the year to February and 29% reported a reduction. The resulting balance of +8% was the lowest figure since September 2012 (+6%) and was the third consecutive month in which the pace of growth had slowed.

The volume of orders fell sharply (-19%) against expectations they would remain flat (0%), perhaps in part reflecting the loss of momentum in volumes of sales (expectations had been +13%).

Fortunes were broadly positive among retail sub-sectors, with grocers being one of the few fallers in this survey, with their first decrease in volumes of sales (-26%) since April 2012 (-19%) and the lowest figure since November 2008 (-46%). Many other sub-sectors enjoyed a more positive return, with clothing (+91%) reporting its highest figure since October 2010 (+95%), and other strong sectors including furniture and carpets (+61%) and non-store goods (+70%) - which includes online and mail-order.

Barry Williams, Asda Chief Merchandising Officer for Food, and Chair of the CBI Distributive Trades Survey Panel said:

“We all know trading is tough, and the bad weather hasn’t exactly been encouraging shoppers to hit the high street lately. But there is a glimmer of hope for retailers with the news that sales are growing, even if at a slower pace than in recent months.

“Clearly, the road to recovery remains fragile. Worries about the economy, pay freezes and the rising cost of living will mean shoppers remain cautious for the foreseeable future.”

Price inflation in shops rose more sharply than expected this quarter (+40%, compared with +24%), but was in line with its long-run average (+40%).

Looking ahead, retailers expect both the volume of sales (+9%) and volume of orders placed upon suppliers (-19%) to see little change in March from this month’s results (+8%, -19% respectively). Sentiment about the general business situation over the next three months remains positive and even saw a modest improvement on the previous quarter (+12% compared with +7%). Investment intentions for the year ahead remain relatively unchanged (-7%, compared with -12%), while employment saw a small fall (-7%) against more positive expectations (+9%).

For wholesalers, volumes of sales (+8%) were better than expected (-1%), while volumes of orders remained flat (-2%). The outlook for the business situation for wholesalers improved for the second consecutive quarter (+25%), while investment intentions flattened out (-3%) compared with the previous three months (-15%).

In motor trades, sales returned to growth (+10%) with the expectation of an even greater acceleration in the volume of sales next month (+50%), which, if realised, would be the strongest growth since November 2012 (+50%). Motor traders are feeling more optimistic about the business situation (+9%) compared with the previous quarter (-3%), reflected in their improved investment intentions (+4%, compared with -24% in the previous quarter).

Source : CBI

27 February 2013
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