Retail sales flat in January amid signs of Brexit stockpiling - CBI
Retail sales were flat in January but growth was expected for the month ahead, according to the latest data from the Confederation of British Industry.
The balance of retailers reporting year-on-year growth in sales volumes came in at zero, stabilising from -13 in December but a touch below expectations for a balance of +2. Sales volumes remained well below average, to the greatest extent since November 2011, while orders placed with suppliers rose only slightly.
The outlook for the coming month was brighter, however, with 43% of respondents expecting sales volumes to increase in February and 19% expecting a drop, giving a balance of +24.
The survey revealed a big increase in the ratio of stocks to expected sales, with the balance the highest since February 2008. This was likely down to a mix of weaker-than-expected demand and stockpiling to prepare for a possible no-deal Brexit.
CBI head of economic intelligence Anna Leach said: "The High Street has had another challenging month, with retail sales volumes flat and well below average for the time year. Pressures on the retail sector remain high, with consumer spending expected to remain fairly subdued and competition fierce.
"There are early signs of companies bracing themselves for a no-deal Brexit: some of our wholesalers are now reporting that they’re building up stocks in case the UK exits the EU without a deal. It’s absolutely vital politicians act immediately to take no deal off the table, protect the UK economy and avoid devastating disruption."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said retailers’ tills should be ringing loudly at present, given that real wage growth is picking up, while employment still is growing healthily.
"But heightened uncertainty about Brexit - clearly evident in surveys of consumers’ confidence, which deteriorated sharply late last year - is encouraging more consumers to be cautious. The reported sales balance remained well below its post-referendum average of +11, while the sales-for-the-time-of-year balance - which has a better relationship with the official data than the headline balance - fell to its lowest level since November 2011.
"As ever, the CBI’s survey should be treated cautiously, given its small sample size and its focus only on the first half of the reference month. Nonetheless, it supports our expectation that retail sales will not be materially higher in Q1 than in Q4, despite the improving trajectory for real wages."