UK retail sales growth cools further in February but investment intentions strengthen

Retail sales growth slowed for the third month in a row in the year to February, according to the latest CBI Quarterly Distributive Trades Survey.

Nearly a third (32%) of respondents to the survey reported sales volumes were up on a year ago last month, while 24% said they were down, giving a balance of +8%, down from +12% in January.

But retailers expect sales volumes to pick up again next month (+21%), with 34% expecting them to rise and 13% to fall.

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Sales were slightly above average for the time of year in February (+4%), with the balance a little above the long-run average of -1%.

Alongside slower sales growth, employment in the retail sector continued to decline for the fifth quarter in a row.

But for the first time since November 2016, retailers expect their business situation to improve over the next three months. And investment intentions for the year ahead strengthened further, hitting their highest since August 2015.

Looking at growth in the economy more broadly, momentum was modest for most of 2017, according to CBI.

Much of this reflected the weakness in household income, which is a factor behind weaker retail sales growth over the past year, the firm explained.

Anna Leach, CBI head of Economic Intelligence, commented: “While trading conditions remain tough, it’s encouraging to see retailers’ investment intentions improving to their highest since August 2015, in addition to signs of renewed business optimism for the first time in more than a year.

“With labour-intensive businesses such as retailers finding it increasingly difficult to find workers, agreeing a jobs-first transition between the EU and the UK, in writing, by the end of March would provide some much-needed certainty.”



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