Retail sales suffer sharp drop in April says CBI
Year-on-year retail sales fell markedly in April as poor weather and the early Easter added to the economic slowdown to dent spending according to the CBI.
Sales of big-ticket items, particularly those tied to the housing market, saw some of the biggest falls, according to the business organisation’s Distributive Trades Survey.
The monthly snapshot of the high street showed that 52% of retailers said sales volumes were down on a year ago compared to 25% who said they were up. The rounded balance of -26 was the weakest since November 2005 and is only expected to improve to -15 in May, signalling further falls in sales volumes.
Unsurprisingly, half of retailers (53%) said sales for the time of year were poor while 15% reported them as good. The balance (-38) is the weakest since November 1992 (-43).
But, the CBI said, while high street activity has certainly dipped as the economy has slowed, these results, surveying the first half of the month, need to be put into context.
In 2007, Easter fell in April and the country enjoyed a mini-heatwave, which helped lift the balance of retailers reporting year-on-year sales growth to its highest for three years. However in 2008, the four day holiday weekend was in March and the weather was wet and windy, quashing shoppers’ desire to hit the high street.
The three-month moving average – which smooths out monthly volatility – slipped from +1 in March to -9 this month, continuing its downward trend since last summer.
As a result of slower sales, retailers’ orders to suppliers fell back to a balance of -28, its lowest since November 2005 (-38), as stock levels remained adequate or better.
Looking at the sector in detail, sellers of durable household goods reported the weakest sales balance (-84), the lowest since October 2005 (-87). Hardware, china & DIY sales were down on a year ago (-59), as were furniture & carpets (-15). Clothing was also down (-25) although shoes & leather goods were up (+37).
The grocery sub-sector, which has seemed robust so far, recorded its lowest balance (+3) since November 2006 (-56).
Ian McCafferty, the CBI’s chief economic adviser, said: “There is no doubt that consumers are tightening their belts as the mood about the economy and its outlook worsens. The trend in recent months has been one of slowing growth and now we’ve seen a fall in sales volumes, particularly so for goods related to the housing market. “The survey needs to be seen in the context of the timing of Easter this year and the poor weather, which have further dampened sales this month. Nevertheless trading conditions are challenging for retailers and sales are expected to fall again in May, albeit at a slower rate.”
