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Economy in Brief

Retail Sales Lag Shops' Plans in March, New CBI Distributive Trades Survey Shows
by Carol Stone March 29, 2006

British retailers face disappointing sales this month, according to today's release of the monthly CBI (Confederation of British Industry) Distributive Trades Survey. A month ago, a net of just 5% of respondents said they looked for March sales to weaken from a year earlier. Instead, a net of 16% saw sales fall. This was a second consecutive actual result that came in far below survey participants' expectations. In February, a slim majority of 1% expected sales to rise, but the actual balance was significantly different, at -18%.

In the motor trades, March results were also far below survey participants' plans. After a difficult year in 2005, many dealers expected sales to recover, so that in January, only a net balance of 7% expected further declines in sales. But sales came in lower, on balance, at 34%. Some recovery did take place in February, when a net of 5% of dealers saw rising sales, albeit over a weak year-ago base. However, this improvement did not last. Dealers looked for continuing modest gains in March to a +7% reading, but sales fell on balance at 18% of outlets.

Retailers have cut orders from their suppliers; after a brief period of less negative readings, a full 25% of firms, on net, reduced order volume in March, following -12% in January and -17% in February. In the motor trades, the number of firms raising or reducing orders is just about even, but this follows a decline at 44% of firms overall for last year, with weakness as deep as -67% in October.

We have cited here the weakening labor markets in the UK, most recently on March 15. Apparently, while disappointing, it should be no wonder that retail sales are feeling the effects.

United Kingdom Apr 2006 Mar 2006 Feb 2006 Jan 2006 2005 2004 2003
Retail Sales: Expected -7 -5 +1 -9 -7 +25 +18
Reported -- -16 -18 -11 -14 +24 +14
Motor Trades: Expected -30 +7 +10 -34 -36 -8 -18
Reported -- -18 +5 -7 -39 -8 -19
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