Retail sales grew at the slowest rate for 18 months in the year to June, claims the CBI's monthly Distributive Trades Survey, published yesterday.
Sales expectations for the month ahead have slipped again. The findings support the May survey which suggested a slowdown in the growth of spending is starting to take effect. Comparing sales with a year earlier, 45% of firms said sales were up while 29% said they were down. The balance of plus 16 in June compares with plus 25% in May and plus 57 % in April.
Retailers continue to be optimistic about the month ahead, though this is the second consecutive survey in which sales expectations have not been fulfilled. The balance of plus 16 recorded for sales volumes in June is well below the expected plus 35%.
Looking ahead to July, retailers revised expectations downwards. 44% of respondents believed sales will improve, 11% said they will decline, giving a balance of plus 33.
With sales continuing to disappoint, retailers have reduced stocks, with orders placed on suppliers rising at the slowest rate since April 1999. A balance of plus 21 in May compares with only plus three in June as retailers ran stocks down to a level that is nearer the long-term average. Stock levels are expected to be run down further over the coming month.
Retailers of confectionery, tobacco, newspapers, durable household goods, books and stationery reported slowing growth but were still experiencing substantial rises in sales volumes. The sharpest slowdowns in sales growth were reported by firms selling clothing, furniture and carpets. They recorded negative or no growth after robust growth in recent surveys.
Wholesalers' sales volumes slowed in response to May's weaker retail sales. But sales were well above the long-term average and, for the first time this year, wholesalers reported increased sales for two months running.
Wholesalers' stocks remain relatively low and orders placed with suppliers rose at a far slower rate than in the previous survey. The market has turned for motor traders with reported sales even weaker than expected. Asked about volume of sales, 30% said they were up, 23% said they were down. A slowdown in growth to plus 17 had been expected but the actual balance of plus seven indicates a more abrupt slowdown. Despite that business is still considered above average for the time of year.