The wholesale sector saw both its volume of sales and orders placed to suppliers fall in August according to the CBI’s latest Distributive Trades Survey.
It reported that volume sale were down 32%, while orders placed upon suppliers fell sharply by 42%, with both results failing to meet the expected 8% and +1% respective growth. The survey reports that further double-digit falls in sales volumes and orders are expected in September.
Meanwhile sales on the UK high street were flat compared to a year ago, broadly in line with retailers’ expectations, but sentiment about the business situation deteriorated sharply.
The survey, conducted over the first two weeks of August, found that 27% of retailers reported an increase in their volume of sales compared to a year ago, while 31% said they had seen a fall. The resulting rounded balance of -3% was broadly in line with expectations of +3%.
Twelve of the 13 retailing sub-sectors saw a slowdown in the pace of year-on-year sales growth this month. In line with the weakening in sales growth, orders placed by retailers with suppliers were down when compared with the previous year (-11%), falling at their fastest rate since January 2012.
The number of people employed in the retail sector was down on a year ago (-25%), following a rise in the previous quarter. Retailers expect to reduce headcount further in the coming month (-12%). Furthermore, investment intentions for the year ahead remain negative (-13% is below the long-run average of 0%), but were less negative than at the turn of this year.
But looking ahead, sales are expected to rise slightly on a year ago next month (+6%), and to be slightly stronger compared to seasonal norms (-15%).
Nonetheless, with a balance of -17%, retailers expect the business situation to deteriorate over the next three months, with sentiment weakening more than at any time since February 2009 (-26%).
Judith McKenna, chair of the CBI Distributive Trades Panel and Asda chief operating officer, said: “Although this summer’s events created a mood of celebration across the nation, these figures would suggest this positivity did not extend to the high street. However, although retailers expect the overall business situation to worsen in the coming three months, they still expect sales to rise year-on-year in September.”