Confidence in UK retail is at a 15 year high with sales growing unexpectedly in August a new report has revealed.
In the latest CBI Quarterly Distributive Trades Survey, 36% of retailers said sales volumes increased in the year to August, while 15% said they fell, giving a balance of +24%, beating expectations of +13%.
Retailers are quoted as saying they only expect the situation to improve in the coming three months and are raising headcount for the first time this year. Expectations are reported as being at their highest since May 2000. Firms are expected to continuing hiring at a ‘robust pace’ until September.
Investment in businesses is also expected to increase in the coming year with plans for capital spending turning positive for the first time in three quarters.
Meanwhile, internet sales growth accelerated in August, but remained below its long-term average, with a slightly stronger performance expected next month.
Retailers expect a faster rate of growth in sales volumes in the year to September with the corresponding balance at +35%.
Their optimism about business situation over the next three months increased in August and an improvement in investment intentions for the year ahead climbed to +17% from -10% in the previous quarter.
Rain Newton-Smith, CBI Director of Economics, said: “Retail growth is continuing at a steady pace and it’s really encouraging to see firms’ investment intentions picking up alongside more jobs being created in the sector.
“Household spending seems to have remained firm going into the second half of this year, so the outlook for the retail sector looks upbeat.
“However, the renewed fall in average selling prices illustrates the intense challenges facing some retailers – particularly grocers – where strong price competition to capture consumer value is still prevalent.”