Retail Recovery Forecast

Although shoppers reined in spending earlier this month, the Confederation of British Industry (CBI) is predicting a recovery for the retail sector in April, particularly with the later timing of Mother’s Day and Easter this year.

Retail sales growth eased in March, although expected sales volumes for next month rose to their highest level since December 2010, according to the CBI’s distributive trades survey, which monitors growth and sentiment in the retail industry.

March sales fell overall to +13 on its index, taking it to the lowest level since November, in comparison with February’s +37 reading, which was the highest since June 2012. However, the survey’s expected sales balance for April rose to +36, its highest since December 2010, up from +28 the previous month.

The survey revealed that grocers’ sales, although on the up still, grew at their slowest rate in four months, while sales actually fell in department stores. Clothing sales also grew substantially, up 27 per cent, although more slowly than last month’s 33 per cent.

Meanwhile, 46 per cent of motor traders reported sales volumes to be up on last year and 43 per cent said they were down, giving a balance of only +3 per cent, although sales are expected to rise solidly in the year to April.

However, internet retail sales volumes continued to rise strongly in the year to March, up by 55 per cent, which was the fastest pace in 11 months, although growth remained in line with its long-run average, taken since August 2009.

The distributive trades survey has now entered its fourth decade and key figures have paid tribute to its usefulness, with Spencer Dale, a member of the Bank of England’s monetary policy committee saying that it is a good early read on how much people are spending in the shops and on cars and therefore offers a valuable input to policymaking.