UK retailers reported broadly unchanged sales volumes in the year to November 2019, after six consecutive months of declining annual sales. That’s according to the latest quarterly Distributive Trends survey by the Confederation of British Industry (CBI). Retailers expect growth to return in the year to December, with their strongest expectations in seven months.
Business conditions are expected to remain stable over the next three months and total employment was broadly flat in the year to November, with the strongest growth in part time employment in five years counterbalanced by a further fall in full-time employment. However, orders placed upon suppliers fell for the seventh consecutive month, and at a faster pace than in October. And retailers are once again planning to spend less on investment next year than they did this year.
Within the retail sector, grocers made the greatest positive contribution to the headline figure this month. Negative contributions came primarily from non-specialised stores, but also clothing and non-store retail. Meanwhile, internet sales growth in the year to November eased to the slowest pace seen since June, and are expected to remain at this below-average pace next month.
Wholesalers will go into the Christmas period feeling less than merry, as their expectations for above-average growth was instead met with the sharpest fall in sales since August 2012. Orders also fell at their fastest pace since July 2016, with further contractions expected in both measures next month.
“Brexit uncertainty continues to weigh on investment plans”
According to CBI Deputy Chief Economist Anna Leach, “Retailers are entering the festive season with a bit of hope that sales will head up, with the strongest expectations in half a year. Actual sales have also stabilised and have nudged above average for the time of year. And employment has stopped falling after three years of decline. But Brexit uncertainty continues to weigh on investment plans for the year ahead, which remain weak.
“As the election period gets into full swing, retailers will welcome the prominence being given to fixing the broken business rates system. But it will be up to the next Government to turn warm words into action.”
Across the economy more broadly, growth has been volatile during 2019, as activity has shifted in response to moving Brexit deadlines, and underlying momentum has slowed. The CBI expects the UK economy to continue to grow modestly in the event of a “smooth” transition to a new Brexit deal. However, a no-deal Brexit is likely to hit output and financial markets significantly. For more detail, see the CBI’s July economic forecast.
How is your business coping with the current uncertainty over Brexit? For advice on preparing for the worst-case scenario, email me or call me on 020 7099 2621.