Renewed optimism among retailers despite slowed sales growth

Retailers are reporting signs of renewed optimism for the first time in more than a year despite sales growth slowing for the third month in a row.

Sales were slightly above average, up 4%, for the time of year in February, while average selling prices growth slowed compared with the previous quarter, when it had risen to its highest since 1991.

Grocers reported strong sales volumes growth in the year to February, up 65%, while "robust" growth was also reported in internet and mail order goods, hardware and DIY.

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However this was partly offset by falling sales in department stores, down 45%, clothing, down 77%, furniture and carpets, and footwear and leather.

A third of retailers (32%) reported that sales volumes were up on a year ago in February while 24% said they were down, but 34% expect them to pick up again next month while just 13% think they will fall, according to the latest CBI Quarterly Distributive Trades Survey.

While sales growth slowed for the third month in a row in the year to February, while employment in the sector continued to fall for the fifth quarter in a row, albeit at the slowest pace in a year.

However, for the first time since November 2016, retailers said they expect their business situation to improve over the next three months.

Their investment intentions for the year ahead also strengthened to hit their highest point since August 2015.

The CBI said retail momentum was "modest" for most of 2017, mainly reflecting the weakness in household income.

Anna Leach, head of economic intelligence at the Confederation of British Industry, 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."