Stock situation expected to worsen in August

Retail sales in the UK continued to grow at a rate well above the average in the year to July, while orders grew at the fastest pace since December 2010, according to CBI data, but the retail, wholesale and motor trades sectors all reported relative stocks as too low, and they expect the situation to deteriorate further in August.

The survey of 124 firms, including 51 retailers, conducted between 25th June and 15th July, found that stock levels in relation to expected sales across the distribution sector reached a survey record low in July, for the second consecutive month

Ben Jones, principal economist at the CBI, said: “Consumer demand continues to support the UK’s economic recovery. Retail sales have been at or above seasonal norms for the last four months now, although this picture is not universal, with the clothing and footwear stores in particular yet to see demand recover to usual levels.

“While demand may be more stable, operational issues worsen. Relative stock levels are at a record low and expected to fall further still, while the number one worry for many firms at the minute is labour shortages throughout the supply chain as staff self-isolate.

“Helping people and businesses live safely with the virus is key to maintaining the confidence needed for economic recovery. Businesses will continue to face significant disruption without a more effective system for allowing double-jabbed people who are not infectious to continue to work – both in the coming weeks but, crucially, as we head into the autumn and winter months.”

Internet sales were flat in the year to July. With growth slowing for the fifth consecutive month, the balance in July was the weakest since the question was first asked in August 2009. Retailers expect internet sales to pick up next month, but growth is expected to remain well below the long run average. Wholesalers, meanwhile, reported the fastest rise in sales since April 2017 in the year to July, with sales volumes seen as good for the time of year to the greatest extent since January 2018. Orders grew at the fastest rate since November 1987.

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