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02/11/2004
CBI urge interest rate freeze following under par retail sales
High street spending lifted in October but overall autumn sales have disappointed retailers, according to the CBI's latest monthly survey.
On the back of the study, which found that retail sales growth has cooled since the summer and the manufacturing recovery was stuttering, the confederation urged the Bank of England to leave interest rates on hold "for the foreseeable future".
Thirty-seven per cent of firms saw sales rise in October, while 26% saw them fall. The balance of plus 11% compares with minus 9% in the September survey and plus 2% in August. Retailers now predict growth at a balance of 12% this month.
But the underlying sales trend - averaging the latest three months' results - is now at its weakest for 18 months. This survey's average sales balance of plus 1% compares with plus 6% for the three months to September and is down from the summer peak of plus 41% for the three months to June.
Retailers now regard their sales as "below normal" for the time of year, having been "above normal" for most of this year, according to the CBI.
John Longworth, chairman of the CBI's distributive trades survey panel, said: "The period of strong spending seen up to the summer is over, with underlying sales growth cooling. Retailers will now be hoping for a boost in the run-up to Christmas. But there is a great deal of uncertainty about the economic cycle and it is unclear how consumer spending will fare in the months ahead.
"An interest rate increase in November would be damaging and there is no need for the Bank of England to consider a further rise for the foreseeable future. Rates are either at their peak now or very close to it. The MPC should reassess the situation in early 2005 when a clearer picture of UK and world growth is available."
The survey covered 20,000 outlets of firms responsible for 40% of employment in retailing.
(gmcg/sp)
On the back of the study, which found that retail sales growth has cooled since the summer and the manufacturing recovery was stuttering, the confederation urged the Bank of England to leave interest rates on hold "for the foreseeable future".
Thirty-seven per cent of firms saw sales rise in October, while 26% saw them fall. The balance of plus 11% compares with minus 9% in the September survey and plus 2% in August. Retailers now predict growth at a balance of 12% this month.
But the underlying sales trend - averaging the latest three months' results - is now at its weakest for 18 months. This survey's average sales balance of plus 1% compares with plus 6% for the three months to September and is down from the summer peak of plus 41% for the three months to June.
Retailers now regard their sales as "below normal" for the time of year, having been "above normal" for most of this year, according to the CBI.
John Longworth, chairman of the CBI's distributive trades survey panel, said: "The period of strong spending seen up to the summer is over, with underlying sales growth cooling. Retailers will now be hoping for a boost in the run-up to Christmas. But there is a great deal of uncertainty about the economic cycle and it is unclear how consumer spending will fare in the months ahead.
"An interest rate increase in November would be damaging and there is no need for the Bank of England to consider a further rise for the foreseeable future. Rates are either at their peak now or very close to it. The MPC should reassess the situation in early 2005 when a clearer picture of UK and world growth is available."
The survey covered 20,000 outlets of firms responsible for 40% of employment in retailing.
(gmcg/sp)
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