Wholesale’s Christmas reasons to be cheerful

The wholesale sector saw its fastest year-on-year sales growth (+53%) in the first two weeks of December, according to latest figures from the CBI.

The report says this was the best the sector has seen since September 2007 (+67%) and greatly exceeds wholesalers’ expectations of broadly flat growth (+3%). A further, but more modest rise in sales is expected in the month ahead (+12%), it adds.

Meanwhile the festive season has lost some of its sparkle for retailers, with growth in sales on the high street slowing in December, this latest CBI Distributive Trades Survey confirms.

It reveals that 36% of retailers reported an increase in volume of sales during those two weeks compared to a year ago, and 17% a decrease. The resulting balance of +19%, although broadly in line with the long-run average (+21%), matches neither the stronger increases in sales volumes seen in the previous two months (+30% and +33%), nor retailers’ expectations (+25%).

As a result, retailers considered sales volumes to be below average for the time of year (-18%), disappointing expectations that they would be in line with seasonal norms (-1%).

In contrast to slowing sales growth, orders placed by retailers upon suppliers rose (+13%) at a similar pace to last month year-on-year (+16%).

Sales growth is expected to continue losing steam next month, with retailers expecting a slower rise once again in the year to January (+10%), while orders placed on suppliers are expected to be flat in the coming month (0%).

Looking in more detail at the retail sectors, grocers recorded their eighth consecutive month of rising year-on-year sales (+42%), while clothing also saw sales growth pick up (+39%). A few other sectors reported a rise in sales, including chemists (+23%) and furniture amp; carpets (+42%), but at a slower rate than in November. The picture was less buoyant for shops selling big-ticket items for the home (durable household goods: -58%), while shops selling footwear amp; leather also saw falling sales (-9%) for the second month running.

Anna Leach, CBI Head of Economic Analysis, said: “This month’s survey hasn’t quite provided the Christmas cheer that retailers anticipated, with sales growth falling short of expectations. Clearly, weak spending power and uncertainty over the economic outlook are likely to remain key risks to the retail sector in 2013.”

Judith McKenna, chair of the CBI Distributive Trades Panel and Asda chief operating officer, said: “This latest data covers the period to the middle of December and we should take heart that sales on the high street have held up during the early crucial Christmas shopping period. However, on-going economic fragility is maintaining the squeeze on household incomes, and it’s notable that sales are below par for the festive season.

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