|Chelmsford's High Street. |
UK 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 today.
Meanwhile, business fell across the
service sector over the last three months. The Confederation of British Industry
is the UK's biggest business lobbying organisation.
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%).
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
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
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%).
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%).
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).
The survey was conducted
between 24th January
and 13th February 2013.
133 firms took part, of which 70 were retailers, 55 were wholesalers and 8 motor
Business fell across the service sector over the last three months - worse
than expected, according to the CBI’s latest quarterly survey.
The business & professional service sector, which includes accountancy, legal
and marketing firms, fell far short of predictions of strong volumes growth. The
sector reported its biggest fall in profitability since November 2011, as
businesses cut their prices and employment costs rose.
And business in consumer services, such as hotels, bars, restaurants and the
travel and leisure industries, fell much more steeply than expected, with a drop
in profitability as rising prices were outpaced by growth in employee costs.
But the survey of 147 firms reports a slightly brighter picture for the next
three months, with volumes in both sectors expected to rise and employment
increasing more markedly.
Profits in business & professional services are expected to remain under
pressure, as prices continue to fall and costs rise. But consumer services firms
are expected to see profitability increase, as prices are expected to rise
The survey also shows the proportion of consumer services firms expecting to
expand over the next 12 months at its highest level for three years, with more
firms saying they will invest in replacing old equipment, reaching new customers
and providing new services.
Anna Leach, CBI head of economic analysis, said: “Economic conditions remain fragile in the service sector.
“Business conditions failed to improve as expected for business &
professional firms, while sharply falling prices bore down on profits. Consumer
services saw a tougher end to the year than expected, as the rate of decline in
business volumes accelerated unexpectedly.
The Service Sector Survey was conducted between 22nd January and
13th February – with 95 business & professional firms and 52 consumer
services firms responding.
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