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UK retail sales rocket at fastest pace since 2018 – CBI

UK retail sales have grown at their fastest rate since 2018, a closely-watched industry survey showed on Tuesday, as non-essential shops start to reopen.
According to the CBI’s April Distributive Trades Survey, a balance of +16% of retailers reported sales volumes as good for the time of year, a sharp improvement on March’s balance of -37% and the largest rise since June 2018.

Sales grew at the fastest pace since September 2018 in the year to April, with a balance of +20% compared to -45% a month previously. The figure was well ahead of the consensus, for around +10%.

However, the hike partly driven by favourable comparatives: sales volumes fell sharply in April 2020, when the first national lockdown was underway, and growth is expected to slow next month.

Ben Jones, principal economist at the CBI, said: “Springtime has brought some relief to the retail sector.”

But he added: “Despite progress along the roadmap, the impact of Covid-19 restrictions are still biting hard. The improvement in retail sales was driven by sectors that have performed relatively well during the pandemic, with little immediate rebound expected for more embattled sectors such as clothing, footwear and department stores.”

The survey found that sales in the hardware and DIY, and furniture and carpets subsectors were “significantly above” seasonal norms, fuelled by an ongoing focus on home improvement. But clothing and footwear remained “well below” seasonal norms.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The reported sales balance is derived from retailers reporting whether sales are higher or lower than in the same month a year ago. The balance, therefore, was always likely to rocket in April.

“The reopening appears to be going fairly well for retailers though we see no signs of a tsunami of pent-up demand.

“Consumers’ confidence has recovered since the start of the year, but still was slightly below its average level in the 2010s in April, according to GfK. Meanwhile, households still are heading for a cold shower at the end of September, when the furlough scheme will and the temporary uplift to Universal Credit will be withdrawn.”

However, the EY Item Club argued: “Consumers look well-placed to play a key role in a robust UK recovery developing from the second quarter, as restrictions on activity are eased.

“Consumer activity should benefit from recent very high savings ratios, especially as the labour market has been resilient and it now looks likely that unemployment will rise much less than had been expected.”

The April Distributive Trades Survey was conducted between 26 March and 15 April. A total of 124 businesses responded, including 60 retailers.

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