Poor weather weighs on retail sales in April, CBI says

Retail sales in the UK fell rapidly in April, the results of a widely-followed survey revealed, although analysts attributed the drop to poor weather and the different timing of Easter in 2016.

Easter fell in early April 2015 but in March of 2016.

Retail, department stores and the clothing sector paced declines with a slowdown also apparent in digital channels, according to the Confederation of British Industry´s Trades Survey for April.

Asked to compare sales volumes in April with those from one year ago, 22.0% of retailers said they had increased and 36.0% that they fell, for a rounded balance of -13.0% - its lowest mark since January 2012 .

Analysts had been expecting a print of +11.0 after a reading of +7 in March.

A balance of -13% of retailers said they placed more orders with suppliers than a year ago.

“Cold weather put a chill in sales of spring and summer ranges with a reported dip in retail sales in the year to April, but with the near-term outlook for household spending holding up the sector expects a modest rise in sales next month.

“However with margins remaining tight within the sector, retailers will continue to operate in a fiercely competitive environment for some time,” said CBI Director of Economics Rain Newton-Smith.

Wholessaling was an expection, reporting a quicker pace of growth in sales volumes. Sales volumes at motor trades also increased more slowly, but nevertheless beat expectations for a more pronounced slowdown.

Grocers reported sales growth held steady in the year to April.

Commenting on the survey results, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the sharp decline in the reported sales balance mainly reflected a calendar effect, although "consumers have clearly tightened their purse strings this year".

Tombs explained that it was reflected in the dip from +1 to 0 in the balance which tracks how retailers view sales in a given month in comparison to "normal levels " for a given tie of the year.

"'Sales for the time of year' balance is consistent with year-over-year growth in official retail sales volumes, excluding petrol, remaining at about 3% in April," he said.

Dr. Howard Archer, chief European+UK economist at IHS was more nuanced, saying: "In the near term, there is the very real possibility that that increased worries and uncertainties over the economic outlook (fuelled by the EU referendum) as well as the recent relapse in earnings growth could make consumers increasingly cautious in their spending.

"The positive gap between earnings growth and consumer price inflation has essentially halved from the peak level seen in the third quarter of 2015, thereby diluting consumers’ purchasing power - although it is still decent."

Sales are expected to rebound next month, while orders are set to fall at a broadly similar pace, CBI said.