UK retail sales fall sharply in May - CBI

The Confederation of British Industry (CBI) reported on Friday its latest survey of 90 firms, of which 42 were retailers, showed retail sales volume balance fell sharply to -27 in May from +13 in April, marking the fastest contraction since October 2017.

Economist had forecast the reading to come in at +8.

The report notes, however, that the sales volumes are expected to improve in June to +7.

According to the report, orders placed on suppliers slumped in the year to May (to -41), and are expected to fall again in June albeit at a slower pace (to -8). Conditions for retailers have further deteriorated with investment intentions for the year ahead (-65) reaching their lowest in survey history (since 1983). Employment also declined on a year ago, for the tenth quarter running and at the fastest pace since August 2009. Overall, respondents expect business conditions to remain broadly stable over the next three months, matching expectations in February.

Non-store retailing was the only positive contributor to this month’s headline figure (+49), while recreational goods were flat (0). However, sales dropped in other sub-sectors, including footwear & leather (-100), furniture & carpets (-50) and hardware & DIY (-25).

Growth in internet sales volumes grew at a faster pace (+38) compared to last month (+28), albeit with growth still below its long-run average (+47). Internet sales are expected to increase at a similar pace in June (+36)

Anna Leach, CBI Deputy Chief Economist, notes that May’s survey paints a dismal picture of business conditions for retailers, who face a grim combination of tough trading conditions, Brexit uncertainty and a burdensome outdated business rates regime, which have collectively pushed investment intentions to a record low.