UK retailers report weak sales in Sept

LONDON: British retail sales fell for a fifth straight month in September, the Confederation of British Industry said yesterday, and credit card lending data also pointed to a possible softening in consumer demand ahead of Brexit.

Britain’s economy unexpectedly shrank in the second quarter and economists forecast it will only achieve modest growth during the three months to September, as exporters face pressure from the trade conflict between the United States and China.

So far consumer demand has stayed solid according to official data, contrasting with business investment which has ground to a halt ahead of the risk of a disruptive no-deal departure from the European Union on Oct 31. The CBI said the headline sales number of its monthly distributive trades survey rose to -16 in September from a 10year low of -49 in August, a somewhat bigger rebound than economists had forecast in a Reuters poll. The gauge of orders placed with suppliers rose to -9 from -59, but stores still judged that sales were poor for the time of year, with this measure dropping to -11 from -6.

“Add to this the pressures of sterling depreciation and the need to plan for potential tariffs and supply issues in the event of a no-deal Brexit and you get a gloomy picture for the sector,” CBI chief economist Rain Newton-Smith said. In recent months, the CBI data has been more downbeat than official figures and data from the British Retail Consortium.

August data from the Office for National Statistics - which includes a wider range of retailers than the CBI survey - showed that sales volumes were up 2.7 percent on a year earlier.

“The CBI’s survey repeatedly has pointed to a retail apocalypse this year that has not occurred,” Pantheon Macroeconomics’s Samuel Tombs said. The weak survey data probably reflected highstreet stores’ difficulty adapting to online competition, he added.

Nonetheless, there have been some recent signs that consumers’ mood may be darkening. A monthly survey by IHS Markit showed on Monday that households were the most downbeat about the outlook for their finances in nearly six years - though a strong job market boosted overall sentiment.

And earlier on Wednesday figures from trade body UK Finance showed credit card lending growth slowed in August to its weakest since February 2015. “Consumer caution may be increasing,” economist Howard Archer of consultants EY Item Club said, adding that households could be less keen on borrowing more now given political and economic uncertainty ahead, and reduced credit availability.

Sainsbury’s to slash costs Meanwhile, British supermarket Sainsbury’s, which failed to merge with Walmart-owned Asda earlier this year, unveiled yesterday a major costcutting plan.

Sainsbury’s will seek to axe £500 million ($623 million, 566 million euros) in costs over the next five years, it announced in a trading update, which also revealed sliding quarterly sales amid fierce competition. The company will shutter up to 70 standalone branches of catalogue division Argosbut will also open another 80 Argos units inside its existing Sainsbury’s stores. —Agencies