UK retail sales hold up in March, CBI says

UK retail sales have held up in March, according to an industry survey, with volumes expected to accelerate next month.

The CBI’s latest monthly Distributive Trades Survey revealed a modestly softer balance of +7 reported sales in March, down from +10 in February and below the consensus estimate that it would remain at +10.

In January and December, the reported sales balance had been +16% and +19%, with a 2015 average of +24.

Meanwhile, the balance of expected sales rose to +17 from +10 last month, but economists pointed this was also below the 2015 average of +34.

The CBI's survey, which polls retailers and wholesalers representing a third of employment in the sector, came alongside data from the Office for National Statistics that revealed retail sales volumes dipped just 0.4% month-on-month in February after jumping 2.3% the month before.

Grocers reported to the CBI that growth to be stable in the year to March and the clothing sector saw sales rising strongly for a second consecutive month.

Wholesalers reported slower sales volumes growth in the year to March, while motor trades saw sales volumes rise strongly.

CBI director of economics Rain Newton-Smith said: "It’s encouraging to see that sales are holding up and expectations have picked up further. Retailers are still face challenging global conditions but will welcome the Chancellor’s Budget reforms to business rates, making it easier for them to operate on the high street.

"Continued low levels of inflation and more jobs will continue to boost household spending, also giving a helping hand to firms."

However, economist Sam Tombs from Pantheon Macroeconomics said: "It’s always best to not place much weight on the CBI’s survey; the reported sales balance is volatile, probably because the survey only spans the first half of the month and covers only 63 retailers.

"The balance also was extremely weak in the first few months of 2015 when the official measure of sales was surging, perhaps suggesting that some seasonal adjustment issues are affecting the survey. Nonetheless, slower growth in retail sales this year makes sense, in light of the tougher fiscal squeeze and slower employment growth."