UK Consumers Opening their Wallets Again: Latest CBI Retail Survey

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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.

The findings of the CBI echo official data on retail sales which last week surprised markets by printing well ahead of expectations.

The message from both survey and official data therefore appears to be UK consumers are still spending, regardless of the ongoing political Brexit impasse.

"The reported sales balance to its highest level since November is another encouraging sign that the Brexit saga hasn’t discouraged households from increasing spending in line with their rising incomes," says Samuel Tombs, Chief U.K. Economist at Pantheon Macroeconomics.

According to the CBI, 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," says a note from the CBI, released Thursday.

Digging into the data, we do however see a mixed picture for sub-sectors.

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.

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 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.

“It’s encouraging to see retailers with more of a spring in their step than in recent months. The recent pick up in real wages is a welcome support to the sector, making the pound in people’s pockets stretch that bit further," says Rain Newton-Smith, CBI Chief Economist.