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Retailers feeling less optimistic about festive sales - CBI survey

By Oliver Haill

Date: Wednesday 20 Dec 2017

Retailers feeling less optimistic about festive sales - CBI survey

(ShareCast News) - Retailers have reported an average run-up to Christmas, according to the CBI's survey of the industry.
A balance of 20% more retailers reported higher sales volumes in December than those reporting lower sales compared to last year, which indicated a slower rate of growth than the 30% expected and was down from November's balance of 26%. The reported sales balance exactly matched its average since the survey began in 1983.

However, the CBI's distributive trades survey, which polled 109 firms, covered late November's Black Friday sales as well as the first half of December. Hard data from the Office for National Statistics showed retail sales volumes jumped 1.1% month-on-month in November.

There was a negative balance of 3% for retailers reporting sales volumes were good for the time of year.

Looking forward to next month, 27% of respondents expect sales volumes to increase next month, with 10% expecting a decrease, giving a balance of 17%.

Orders placed with suppliers were not as good as hoped, with a balance of 11% versus expectations of 22%.

The ONS reported that "Household goods stores had a good November, with a number of businesses saying that Black Friday promotions boosted sales."

"Retailers have seen decent growth heading into the vital Christmas trading period, although it was weaker than expected," said CBI principal economist Alpesh Paleja.

"It's clear that people are stocking up on food for their Christmas lunch, with grocers' sales driving most of the sales growth seen in December."

"Notwithstanding the sales growth seen in the last couple of months, underlying trading conditions are tough for retailers. We expect the squeeze on real pay for households to last a while longer, so retailers will still face challenging conditions ahead. The Government's industrial strategy is a good start for boosting productivity and living standards, but consistency and determination is needed to make it a long-lasting success."

The CBI's survey points to middle-of-the-road pre-Christimas trading for retailers, said economist Sam Tombs at Pantheon Macroeconomics.

"As ever, we caution against placing much weight on the CBI's survey, given that it is derived from responses from only 56 retailers and it refers to trading only in the first half of the month."

He added: "Retailers, meanwhile, are holding less stock than this time last year, potentially indicating that post-Christmas discounts will be less generous than usual and that inflation will fall only modestly from November's 3.1% rate over the coming months."

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