CBI boosts hopes of a fourth-quarter growth
Oct 28 2009 by John Cranage, Birmingham Post
Hopes that the British economy will return to growth in the fourth quarter of 2009 were given a boost by the latest CBI snapshot of activity in the high street.
The survey found that sales volumes have grown in October at the fastest rate for nearly two years and that retailers are more upbeat about their prospects than at any time since July 2007.
The latest CBI monthly Distributive Trades Survey reported that sales in sectors related to the housing market had improved and that the high street expects stronger growth in November.
Asked about sales in the year to October, 41 per cent of respondents said that volumes had risen and 33 per cent said they were down.
The resulting balance of plus-eight was more than double the predicted balance of plus-three, the result of September’s survey and the highest since December 2007.
At 19 per cent, the balance of respondents expecting sales volumes to improve next month was the most optimistic since July 2007, which also yielded a 19 per cent surplus.
The CBI said sales were reported to be “poor for the time of year” by a balance of five per cent of retailers, a marked improvement on the figure of minus-22 per cent in September.
A three-month moving average of volumes which smooths out monthly peaks and troughs stabilised at minus-two per cent this month and is expected to grow slightly to plus-three per cent in November.
Stock levels held by retailers have increased and rising demand should feed through to suppliers in November as trade strengthens.
Growth is being led by such sectors as durable household goods, and furniture and carpets while booksellers and stationers are reporting improving business levels “after a particularly difficult year”.
Clothing, footwear, leather goods and grocery retailers also report rising volumes but chemists, hardware, china and DIY stores are doing less well.
Andy Clarke, chairman of the CBI distributive trades panel and chief operating officer of Asda, said: “The latest official data shows the economy is still in recession, however the retail sector seems to be finding its feet again after a challenging year, and the outlook for November is encouraging.
“But overall the economy remains troubled and some retailers will find the recovery slow and painful.”
Mr Clarke said the planned reversal of last year’s cut in VAT should help to support sales in the next two months and indicated a recovery in the housing market was also having an impact.
The CBI figures may provide some relief after official retail sales data which showed sales volumes stagnated in both August and September. However economists noted that the current survey may have been flattered by the weakness of spending a year ago.
“The CBI balance is probably more a reflection of previous weakness than the current strength of sales,” said Vicky Redwood at Capital Economics.
Howard Archer of analysts IHS Global Insight said: “The CBI’s survey...boosts hopes that the economy will finally return to growth in the fourth quarter.”
