Retailers delivered a surprise rise in sales in September after four months of falls, indicating that spending on the high street is stabilising ahead of the crucial Christmas trading period.
In a further positive sign, retailers expect the better-than-expected sales to remain “broadly flat” in October, according to the CBI Distributive Trades Survey. The volume of orders placed with suppliers in September also fell at the slowest rate since February 2008.
While 36% of retailers said that sales volumes fell in the year to September, 39% said they rose. The net balance of 3% equalled this year's best figures in April.
Andy Clarke, the chief operating officer of Asda, said: “After such a difficult summer, it is encouraging to see signs that conditions in the retail sector are stabilising. But, with unemployment rising, wage growth low, and consumers building up savings, spending is likely to remain subdued for some time.”
He also said that shoppers may bring forward spending ahead of VAT returning to 17.5% on 1 January.
The September uplift was driven by a strong performance by the grocers and footwear and leather retailers. The CBI said the three month average improved to a net balance of 9% of retailers reporting falling sales, compared with 16% in August.
While all other retail sectors delivered falling sales, the decline at clothing, and furniture and carpet retailers was the lowest so far this year. The worst performers were retailers of durable household goods with a net balance of 53% posting declining sales. After 11 months of falling sales, wholesalers delivered flat sales in September, with sales down at a net balance of just 1%, said the survey conducted between 27 August and 16 September.
Graeme Maclaughlin from Barclays Commercial Bank NI, said: “The climate for retailers remains tough and although we have seen some businesses posting good results, the shape of the retail sector is prompting mixed views. Today’s figures highlight the evidence we have noted recently; that the sector is flat for the moment.
“The rise in VAT may bring good news for businesses in the short-term as shoppers may consider picking-up larger discretionary items in advance of any percentage hike proposed for early next year. However the impact of this on sales in the New Year remains to be seen.”