Retail sales show weak rise with tough Christmas ahead

Snow falls on Oxford Street in central London
Retailers suffered 'another tough month', the BRC said, as cold weather discouraged shoppers. Photograph: Leon Neal/AFP/Getty Images

Retail sales climbed during November but shops still face a difficult Christmas as snow and plunging temperatures add to shoppers' worries about rising unemployment and the state of the economy.

A monthly survey by the British Retail Consortium and accountants KPMG found sales moved up 0.7% on a like-for-like basis from November 2009.

The BRC said that while clothing and footwear sales gathered pace, non-food sales overall remained sluggish and recorded a downturn on a like-for-like basis. Much of the growth in food sales could be accounted for by inflation resulting from higher commodity prices, especially wheat.

A spokesman for the BRC said: "It's been another tough month. Total sales growth has been weak now for eight months in a row and, given that VAT has pushed up annual inflation boosting sales values, underlying volume growth is virtually zero. Customers are cutting back because they're worried about prospects for their own jobs and personal finances."

Internet sales proved more resilient with shoppers placing orders ahead of an expected surge of buying away from the high street, in part to beat the weather. Sales of goods on the internet, via the telephone and mail order jumped 17.6% on a year ago, against a 16.9% increase in November 2009.

Car sales also dropped, though not as much as some analysts had feared. The Society of Motor Manufacturers and Traders (SMMT) reported that new car registrations fell by 11.5% year-on-year in November to stand at 139,875 units. While this was a fifth successive decline, it was half October's 22.2% year-on-year drop. Car sales were boosted last year by the government's scrappage scheme and manufacturers expected a fall this year.

Economist Howard Archer said it was likely the drop in car sales in November was limited by some buyers looking to beat January's VAT hike.

Meanwhile data yesterday suggested the construction industry may take longer to recover than had been anticipated. Forecasts from the Construction Products Association suggested the sector, which has driven economic growth this year, will fall by 2% in 2011 and 0.7% in 2012.

Despite an unexpected 4.5% surge this year, public sector cuts will hit in 2011 and 2012, meaning growth will return in 2013, a year later than the CPA had expected.

Gloom in the domestic market last month was offset by soaring confidence among exporters, according to a regular survey by currency dealer Travelex.

A resurgence of trade and expectations of continued growth next year meant 70% of firms felt confident about current conditions. The rise in positive sentiment was driven by stronger than anticipated economic growth in the third quarter, as trade made its biggest contribution to UK growth in two years. Travelex said: "Confidence in the UK economy also flourished in November, as a string of strong economic data created a 'feelgood factor' within the sector. And 85% of importers and exporters felt confident that UK economic growth would be sustained, a rise of 19% from the previous month."



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