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UK high street sales grew modestly in the year to October

The CBI's monthly Distributive Trades Survey also shows that sales in sectors related to the housing market improved, and that the high street anticipates stronger sales growth in November.

GENERAL MERCHANDISE

UK high street sales grew modestly in the year to October

The CBI's monthly Distributive Trades Survey also shows that sales in sectors related to the housing market improved, and that the high street anticipates stronger sales growth in November.

Asked about sales in the year to October, 41% of respondents said that volumes had risen, while 33% said they were down. The resulting balance of +8% beat expectations (+3%), was an improvement on September's broadly flat sales (+3%), and was the highest since December 2007 (+8%).

Looking to November, a balance of 19% expects sales volumes to improve, which is the most optimistic since July 2007 (+19%).

Sales were reported to be poor for the time of year by a balance of 5% of retailers, which was a marked improvement on September (-22%). A net 7% believes sales will remain below seasonal norms in November.

The three month moving average of sales volumes, which smoothes out monthly peaks and troughs, stabilised (a balance of -2%), and is expected to grow slightly in November (+3%).

Stock levels increased further in relation to expected demand, with a net 13% saying they were more than adequate to meet demand. A similar level is forecast for November.

A balance of 3% of firms said the volume of orders placed on suppliers fell, but the improved retail demand should feed through to suppliers in November, when firms predict stronger orders (+11%).

Looking at individual retail sectors: durable household goods, furniture & carpets, and booksellers & stationers all reported growth after a particularly difficult year. Sales growth was also seen by clothing, footwear & leather retailers and grocers. However, sales volumes fell at chemists and retailers of hardware, china & DIY.

Andy Clarke, Chairman of the CBI Distributive Trades Panel, and Chief Operating Officer of Asda, said:

"The latest official data shows the economy is still in recession, however the retail sector seems to be finding its feet again after a challenging year, and the outlook for November is encouraging. But overall the economy remains troubled and some retailers will find the recovery slow and painful.

"It is heartening to see signs of life in sectors related to the housing market, particularly those retailers selling white goods and furniture, who have had a torrid two years. And we think some consumers will bring forward big ticket purchases to beat the VAT rise in January."

Sales volumes in the wholesale sector were broadly flat for a second month running (a balance of -1%), which beat expectations of a heavy fall (-38%). Flat sales are expected in November. Industrial materials and builders' merchants wholesalers had another very difficult month, though not as testing as the previous six months, while food and drink wholesalers reported strong sales growth.

Motor traders' sales volumes fell in the year to October (a balance of -40%), despite a flat September (+1%), and a net 46% expects sales to fall in November. Sales were harder hit for traders of vehicles, rather than those selling parts & accessories, who reported sales to be broadly flat.

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