Retail sales improve in August, CBI survey says

The reported sales balance, which measures sales volumes compared with the same month a year ago, picked up to +9 in August, up from the -14 in July and ahead of a consensus expectation of a zero balance to its highest level since February.

Sales volumes look set to be broadly flat over the next month, the CBI said, and although the volume of orders placed upon suppliers fell for a fifth consecutive month, retailers expect them to rebound.

Confidence improved since July's gloomy survey, with the forward-looking output expectations balance climbing to +3 from -12 a month ago.

“The summer weather has brought shoppers out onto the high street with retailers reporting that sales growth has risen, outdoing expectations, although firms do expect sales growth to ease next month," said Anna Leach, head of economic analysis and surveys.

“While the fall in sterling has boosted visitor numbers to the UK, it is likely to push up the price of imported goods over time which will mean households will be more likely to rein back spending on non-essentials.”

Looking at different subsectors within retail, sales volumes grew to +39% in clothing and non-store goods at +66%, on the downside sales volumes for grocers were relatively flat at +3%.

Average selling prices fell (-5%) for the first time since last November.

Economist Ruth Gregory at Capital Economics said the survey was "nothing to get excited about" and that the figures "still point to a slowdown in the official measure of retail sales growth after July’s strength".

She added that despite the rebound in the headline figure, the reported sales balance remained far below the survey’s average of about +20 over the past two years.

Although the confidence readings were improved she warned against getting too carried away though, as both of these readings remain well below their long-run averages.

"More encouragingly, however, the investment intentions balance of the quarterly survey rose above its long-run average, from -13 in Q2 to +15 in Q3."

Sam Tombs at Pantheon Macroeconomics stressed that the survey has been a "very poor bellwether" lately, with the survey’s narrow scope of just 58 retailers in August meant it was prone to giving a misleading steer.

The ONS responded to say that their economic surveys "have been reliable indicators of the UK economy over a long period of time".

Away from the high street, Tombs added that there were "clear signs" that consumer spending was slowing down: "falling new car registrations and declining mortgage approvals show households are shying away from big-ticket purchases. Looking ahead, we continue to expect growth in overall spending to slow sharply, as inflation picks up in response to sterling’s depreciation and firms scale back hiring."