High street sales see good start to December

The high street saw its strongest sales in early December since April 2002, suggesting a very strong run-up to the Christmas season, according to a closely watched survey.The CBI’s Distributive Trades Survey, conducted between

November 25 and December 8, found a balance of 56 per cent more retailers reported sales above their levels of one year earlier, the best reading since a 57 per cent margin more than eight years ago.

The areas showing the strongest improvement in sales were hardware and do-it-yourself equipment, clothing and sales at non-specialist retailers such as department store chains.

However, the survey also found that retailers expected more subdued growth in the months ahead, with the balance forecasting higher sales during the next three months at a narrower 45 per cent of those surveyed.

Among wholesalers, the picture is much less upbeat. A balance of 13 per cent more reported sales lower than a year ago, although they are less pessimistic about prospects in January. For the first month of the new year, a balance of 25 per cent more wholesalers expect higher sales than those of a year earlier.

“Sales on the high street continued to rise strongly compared with a year ago, reflecting a stronger crucial pre-Christmas trading period,” said Ian McCafferty, chief economic adviser of the CBI employers’ group.

However, Mr McCafferty warned that some of the robust activity in high streets may be due to purchases brought forward to avoid the rise in value added tax to 20 per cent next year.

“Indeed, retailers expect sales growth to lose momentum in the new year,” Mr McCafferty said. “We remain cautious about prospects for the retail sector further ahead, given ongoing uncertainty over the resilience of consumer spending.”

Simon Hayes, economist at Barclays Capital, noted that the message from the latest survey was one of buoyant sales.

“Taken at face value, the survey provides evidence against concerns of expected weaker consumer demand owing to worsening consumer confidence and purchasing power,” he said.

But he added that the survey should be treated with some caution, because recent similar surveys had proved to be at odds with official retail sales data.

Image: Selfridges campaign