U.K. retail sales growth contracted for the third consecutive month in February but businesses' outlook improved for the first time since November 2016, the Confederation of British Industry, or CBI, said in its latest Quarterly Distributive Trades Survey.
Some 32% of respondents said sales volume rose in February from a year ago while 24% said they declined. The positive balance of 8% was down from 12% in January. Grocers, hardware and do-it-yourself and non-store goods sub-sectors recorded growth in volumes. Department stores and retailers specializing in clothing, footwear & leather and furniture & carpets registered a decline in sales.
Employment in the retail sector dropped for the fifth quarter in a row. But for the first time since November 2016, retailers expressed optimism that their overall business situation would improve slightly over the next three months. Investment intentions for the year ahead hit their highest level since August 2015.
"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," Anna Leach, CBI Head of Economic Intelligence, said. "With labor-intensive businesses such as retailers finding it increasingly difficult to find workers, agreeing a jobs-first transition between the EU and the U.K., in writing, by the end of March would provide some much-needed certainty," she added.
Orders placed with suppliers remained broadly flat. Some 31% of survey participants reported a rise while 28% recorded a fall. Firms said they expect orders to pick up in March.
Growth in average selling prices eased compared with the previous quarter but remained above the long-term average in the year to February. A similar rate of price growth is projected for March.