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UK retail sales growth slows but investment intentions rise in February - CBI
Retail sales growth in the UK unexpectedly slowed this month, according to the latest quarterly distributive trades survey from the Confederation of British Industry.
Sales growth slowed for the third month in a row, with 32% of respondents reporting a rise in sales volumes from a year ago and 24% reporting a drop, giving a retail sales balance of +8. This was down from +12 in January and missed expectations for a nudge up to +13.
Still, the survey also found that most retailers expect volumes to increase next month, with 34% seeing a jump and 13% expecting a decline. This gave a balance of +21 compared to +13 in January.
Investment intentions also strengthened, climbing to their highest level since August 2015.
Anna Leach, CBI head of Economic Intelligence, said: "While trading conditions remain tough, it's encouraging to see retailers' investment intentions improving to their highest since August 2015, in addition to signs of renewed business optimism for the first time in more than a year.
"With labour-intensive businesses such as retailers finding it increasingly difficult to find workers, agreeing a jobs-first transition between the EU and the UK, in writing, by the end of March would provide some much-needed certainty."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Retailers probably are right not to read too much into the poor performance of retail sales in January, when volumes were 0.5% below their Q4 average. But with wage growth recovering only gradually, the fiscal squeeze set to intensify again and mortgage rates set to climb, many retailers are risking being caught out again by how weak growth in consumers' spending will be this year."
Howard Archer, chief economic advisor to the EY Item Club, said: "A subdued February CBI survey reinforces the impression of cautious, squeezed consumers containing their spending early on in 2018.
"The survey follows data from the ONS showing that retail sales volumes only edged up 0.1% month-on-month in January after a drop of 1.4% in December. Consumer confidence is also fragile, fuelling caution over making major purchases. At least though, confidence improved in January from a four-year low in December."