Retail sales get a spring in their step

Retail sales grew for the first time since November 2018 in the year to April, according to the latest monthly CBI Distributive Trades Survey.

The survey of 110 firms, of which 55 were retailers, showed that sales volumes rose for the first time in five months, likely supported by the later timing of Easter this year. Indeed, sales remained above average for the time of year. Orders placed on suppliers also grew and are expected to pick up further in the month ahead, with sales volumes also set to see somewhat faster growth.

However, while growth in online sales improved slightly, it remained far below its long-run average.

The picture for sub-sectors within retailing was mixed. Grocers and other normal goods (e.g. jewellery, flowers) were the two primary drivers being this month’s sales growth. But while grocers returned to growth this month, after seeing broadly flat sales in March, the rise in volumes was still below the long-run average. Furthermore, other sectors fared worse, with sales falling notably in clothing and department stores.

Elsewhere, wholesalers reported their weakest growth since June, with a decline in sales expected in the year to May – if realised, this would mark the fastest fall in six years. Motor traders also saw a return to growth in sales volumes, but expect a small fall next month. The survey showed further signs of stockpiling, with motor traders’ stocks relative to expected demand rising to their highest since December 2008.

Stockpiling is likely to have supported economic growth in early 2019 as a whole. However, as flagged by business surveys, underlying conditions remain more subdued, as Brexit uncertainty and slower global growth bites further on activity. For more detail on our view of the outlook, see our latest economic forecast.