August retail sales plunge at fastest pace since 2008

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CBI: August retail sales plunge at fastest pace since 2008
"Retailers expect a chilly few months ahead." - CBI deputy chief economist Anna Leach
// Retail sentiment sees sharpest fall since December 2008, around the time of the financial crisis
// The CBI’s gauge of retailers slumped to -49 in August from -16 in July.
// This is also the second weakest reading since records began in 1983

UK retail sales in August fell at the sharpest pace since December 2008, according to new data from CBI that added to signs of a slowing economy as Brexit nears.

The CBI’s latest Distributive Trades Survey – which provides a gauge of retailers or the difference between those reporting rising and falling sales volumes – slumped to -49 in August from -16 in July.

Along with marking the biggest pace in a drop since the 2008 financial crisis, it was the second weakest reading since records began in 1983.

The reading was also worse than all forecasts in a Reuters poll of economists that pointed to an improvement to -11.

The CBI said the latest figures means retailers can expect the sharpest deterioration in business conditions since February 2009 in the coming months.

It comes less than two weeks after ONS data showed that the UK economy contracted in the second quarter of the year and would enter a recession if it shrinks again in the July-September period.

The CBI said that while retail sales volumes and orders both fell at their fastest since December 2008 in the year to August, sales were only slightly below average for the time of year, and to the least extent in four months.

The Distributive Trades Survey also highlighted that conditions have further deteriorated, with investment intentions for the year ahead staying negative for the sixth consecutive quarter.

Within the sub-sectors, only non-store retailing posted a rise in sales, while volumes dropped across most other sectors, including in grocers, clothing and hardware & DIY.

Internet sales growth remained below its long-run average, with the rise similar to last month, and the same pace of growth expected to continue next month.

CBI deputy chief economist Anna Leach said the sentiment among retailers was “crumbling” due to unexpectedly weak sales.

“With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead,” she said.

“It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon.

“But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy.

“Businesses will be looking for government action at the Budget in the coming months to alleviate some of these pressures.”

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