UK retail sentiment hits 17-year low as sales slide: CBI survey

Retail confidence in the UK has fallen at the fastest pace in seventeen years, with a growing share of firms expecting their business situation to deteriorate over the coming quarter, according to the Confederation of British Industry (CBI)’s latest quarterly Distributive Trades Survey.

Persistent weak demand and uncertainty ahead of the Budget are driving retailers to scale back recruitment and investment.

Retail sales volumes dropped sharply in the year to November, recording a weighted balance of minus 32 per cent, compared with minus 27 per cent in October. Despite some expectation of a marginally slower decline next month (minus 24 per cent), demand remains significantly weaker than seasonal norms.

Retailers judged November’s performance to be ‘poor’ at minus 25 per cent against seasonal expectations, a steeper miss than October’s minus 15 per cent. December is also expected to disappoint at a similar level (minus 18 per cent), as per the survey.

Business sentiment deteriorated to its weakest level since 2008, dropping to minus 35 per cent from minus 10 per cent in August. Mounting caution has led retailers to cut back spending plans, with capital expenditure intentions at minus 42 per cent—unchanged from August and far below the long-run average of minus 3 per cent.

Hiring is also being affected, as retail employment declined at minus 19 per cent in the year to November, from minus 14 per cent in August. Headcount reductions are set to accelerate slightly next month to minus 23 per cent.

Retail selling price inflation slowed significantly to plus 46 per cent in November, down from plus 65 per cent in August, moving closer to historic averages. Retailers expect price growth to ease further to plus 40 per cent next month. However, lower pricing momentum has yet to lift demand, which continues to be constrained by weakened consumer spending power and ongoing uncertainty.

In contrast to store sales, online retail sales volumes grew moderately in November at plus 13 per cent, up from plus 4 per cent in October. Retailers anticipate a surge in December to plus 50 per cent, the strongest expectation since May 2021, signalling a strong pivot to digital spending over the festive period.

Total distribution sales volumes declined further in November at minus 35 per cent, slightly worse than October’s minus 30 per cent. A similar rate of decline is expected in December.

Orders placed on suppliers also fell sharply at minus 25 per cent, with a steeper cutback expected next month at minus 34 per cent. Wholesale sales volumes mirrored October’s performance at minus 31 per cent, with little change expected in December (minus 34 per cent).

ALCHEMPro News Desk (HU)