The
Confederation of British Industry (CBI) reported on Friday its latest survey of
90 firms, of which 42 were retailers, showed retail sales volume balance fell
sharply to -27 in May from +13 in April, marking the fastest contraction since
October 2017.
Economist had
forecast the reading to come in at +8.
The report
notes, however, that the sales volumes are expected to improve in June to +7.
According to
the report, orders placed on suppliers slumped in the year to May (to -41), and
are expected to fall again in June albeit at a slower pace (to -8). Conditions
for retailers have further deteriorated with investment intentions for the year
ahead (-65) reaching their lowest in survey history (since 1983). Employment
also declined on a year ago, for the tenth quarter running and at the fastest
pace since August 2009. Overall, respondents expect business conditions to remain
broadly stable over the next three months, matching expectations in February.
Non-store
retailing was the only positive contributor to this month’s headline figure
(+49), while recreational goods were flat (0). However, sales dropped in other
sub-sectors, including footwear & leather (-100), furniture & carpets
(-50) and hardware & DIY (-25).
Growth in
internet sales volumes grew at a faster pace (+38) compared to last month (+28),
albeit with growth still below its long-run average (+47). Internet sales are
expected to increase at a similar pace in June (+36)
Anna Leach,
CBI Deputy Chief Economist, notes that May’s survey paints a dismal picture of
business conditions for retailers, who face a grim combination of tough trading
conditions, Brexit uncertainty and a burdensome outdated business rates regime,
which have collectively pushed investment intentions to a record low.
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