High street sales exceed expectations in July
Sales on the high street increased in July compared with a year ago, and surpassed expectations, according to the latest CBI Distributive Trades Survey.
Retailers expect sales growth to continue strongly next month. It found that while 18 per cent of retailers said that sales were lower than a year ago, 51 per cent said they rose, giving a balance of +33%. This compares with an expected figure of +11% based on survey findings last month, and was the highest balance since April 2007 (+44%).
Annual summer discounts, the World Cup and warm weather appear to have encouraged high-street sales, the leading business group said.
Looking to August, a balance of +45% expects a higher volume of sales next month – the most positive figure since June 2004 (+46%).
The July Distributive Trades Survey was conducted between 23 June and 14 July, and covered 131 companies.
The CBI also announced that its Distributive Trades Survey has been reclassified and re-weighted to bring the data in line with the latest UK and European Commission official classification systems. This permits easy comparison with other economic indicators.
The reclassification changes for the distribution sector as a whole are quite detailed, and affect the subsector listings for retailing and wholesaling. For example, a number of new retail subsectors have been introduced, including cultural goods and recreational goods. Equivalent historical figures have been provided for these subsectors to permit comparison over time. The long-term trends in the headline retail and wholesale figures under the previous classification and weights, and the new system, are very similar.
Lai Wah Co, CBI Head of Economic Analysis, said: “High street sales have performed well this month, with growth better than retailers predicted. Annual summer discounts and warm weather helped lift sales of clothing, while grocers and durable household goods retailers appear to have benefitted from a World Cup boost to sales of food, drink and new televisions.
“Retailers are optimistic that strong sales growth will continue next month, which is promising. We still expect the recovery in overall consumer spending to be fairly restrained, however, given concerns about the impact of public spending cuts and weak prospects for real take-home pay in the coming year.”
In wholesaling the figures were less encouraging. Comparing July with a year ago, 42% of wholesalers said the volume of trade was lower and 31% said it was higher, giving a balance of -11%. This was notably lower than the +26% figure expected last month. Wholesalers also expect the volume of sales next month to be lower than a year ago (a balance of -18%).
In the motor trade, the volume of sales was also lower than a year ago with a balance of -17%, though this wasn’t as bad as the -49% balance expected last month. Volume of sales is also expected next month to be lower than a year ago (a balance of -23%).
