UK Retail Sector continues to show signs of weakness

The latest estimates from the CBI Distributive Trades Survey indicate a sharp contraction in retail sales volume. The sharp fall in the expectations component further suggests that this weakness could persist through the coming month, presenting a challenging landscape for the retail sector.
The key messages from today’s survey included:

• Headline sales volumes in the retail sector continued to decline for a third consecutive month. The balance of respondents suggesting comparing sales volumes with a year ago sales fell to -25% in July from -9% in June. The expectations balance in the meantime fell to -35% in July from a balance of zero in June.

• Forward-looking gauges, moreover, additionally hint that further weakness is to come. Underlying details of the survey, for example, revealed weakness in new orders and elevated finished inventory positions.

• Alongside this, the CBI Distributive Trade Survey reported a decline in wholesale sales volumes but at a slower pace in July (-9% from -15% in June). As for the expectation component, wholesalers anticipate volumes to fall at a similar pace next month.

• The balance for motor trade sales volumes also fell to -27% in July from -11% in June, with a modest decline in sales volume expected in August.