Retail sales fall as costs bite
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Retail sales volumes have fallen this month compared with the same period last year, while staffing levels have dropped sharply, a survey has found.
Volumes fell to a balance of -10 per cent in the sentiment survey published by the CBI, which had recorded 5 per cent growth the month before.
Retailers also said their staff headcounts had fallen at the fastest pace since February 2009 and the aftermath of the financial crisis. The survey by the employers’ group is the latest to show that weak sales and more than a year of soaring costs have led to caution among retailers about hiring new staff.
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The survey of 123 respondents, 46 of which were retailers, asked business leaders whether their company’s performance on a given metric had increased or decreased and weighted responses based on the size of the company to give a balance between -100 per cent and 100 per cent, where a positive figure indicates growth.
Businesses’ intentions to invest also have fallen at the quickest pace since May 2020, during the first pandemic lockdown.
Separate research by the Recruitment and Employment Confederation found that the number of people hired for full-time jobs contracted at the fastest rate in more than two years in April, while temporary recruits continued to rise.
Martin Sartorius, principal economist at the CBI, said: “Retailers continue to face a challenging trading environment, with firms reporting disappointing sales and formidable inflationary pressures. As a result, they are having to cut back on the size of their workforce and investment plans.”
However, there were reasons for retailers to be more optimistic, he said: “Consumer sentiment has been improving and households’ energy bills are set to decline from July. The resulting boost to incomes should help to support retail sales going into the second half of this year.”
Samuel Tombs, chief UK economist at the Pantheon Macroeconomics consultancy, said household incomes would benefit from the fall in the energy price cap announced yesterday and the expected slowdown in the pace of price rises in the coming months, but rising mortgage costs and cautious hiring by employers would offset some of the benefits.