Retail sales volumes in the year to September fell for the fifth consecutive month, albeit at a slower pace than the previous month, according to the latest CBI Distributive Trades Survey. Retailers expect the contraction in sales volumes to ease further in October.

Similarly, orders placed on suppliers contracted at a slower pace than in August, having also fallen for five consecutive months. Orders are expected to be broadly flat in the year to October.

Sales volumes were seen as poor for the time of year and to a greater degree than last month. Sales are expected to be broadly average for the time of year next month.

Growth in internet sales eased slightly in the year to September and has remained below the long run average for the past seven months. Expectations are for improved growth in October, although again this will fall short of the long run average.

Aside from furniture and carpet sellers, which reported unchanged volumes in September, sales contracted across all sectors, with lower sales by clothing retailers and department stores driving the fall in volumes.

Rain Newton-Smith, CBI Chief Economist, said:

“Five successive months of falling volumes tells its own story about the tough conditions retailers are having to operate in. Add to this the pressures of Sterling depreciation and the need to plan for potential tariffs and supply issues in the event of a no-deal Brexit and you get a gloomy picture for the sector.

“Retailers are also grappling with ongoing challenges such as digital disruption and the cumulative burden of government policies. Reforming an outdated business rates system and a more flexible apprenticeship levy which delivers better value for money could really help to alleviate the pressure on retailers during these difficult times.”

Elsewhere, wholesale volumes and orders grew for the time first since June and January respectively, with further increases in both expected next month. Motor traders also saw volumes and orders grow for the first time since April, although the improvement is expected to be short-lived, with both sales volumes and orders expected to fall in October.

Across the economy more broadly, growth has been volatile in the first half of 2019, driven by companies stockpiling ahead of previous Brexit deadlines and a change in the timing of car plant annual shutdowns. We expect the economy to grow modestly, though a no-deal Brexit would likely hit activity and financial markets significantly.


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