UK experiences highest number of retail job cuts since 2009
Retail employment fell at the fastest rate since February 2009 in the year to August, with an even sharper decline anticipated in the year to September, according to the CBI’s latest monthly Distributive Trades Survey.
The survey – which featured 63 retailers among its 128 respondents – also showed a slight fall in retail sales on a year ago, which comes after broadly flat sales in the year to July, while a faster fall is expected next month. The decline was broad-based across sectors, with only grocers, furniture & carpets, non-store and ‘other’ goods sales seeing growth.
A special question asked this month found retail sales were, on average, 27% lower than in ‘normal’ conditions (i.e. in the absence of the pandemic). This represents a significant improvement on the last time this question was asked in June (-79%).
Other survey findings included a fall in orders for the sixteenth consecutive month, while stock levels in relation to expected sales eased to their lowest since March.
Alpesh Paleja, CBI Lead Economist, said: “The furlough scheme has proved effective at insulating workers and businesses in some of the worst-hit sectors during the pandemic, but these findings reinforce fears that many job losses have been delayed rather that avoided.
“Indeed, the latest survey shows that trading conditions for the retail sector remain tough, even against the backdrop of business slowly returning. Firms will be wary of deteriorating household incomes and the risk of further local lockdowns potentially hitting them in the pocket for a second time.
“As a result, further support may well be needed for the retail sector if demand continues to disappoint. Extending business rates relief will go a long way towards alleviating pressure on retailers’ cash flow.”
Investment intentions for the year ahead remained firmly negative, but less so than in the previous quarterly survey.
Despite the gloomy data, however, retailers expect a moderate improvement in the business situation in the coming quarter.
Elsewhere, wholesalers saw sales fall for a fifth consecutive month, but do anticipate an easing in the decline in September. And motor traders saw growth in sales pick up further from last month, and another rise next month as well.
Key findings Figures are balance statistics unless otherwise stated.
• Retail sales fell slightly in the year to August (-6% from +4% in July) and are expected to fall at a faster rate next month (-17%).
• Orders fell again (-27% from -14% in July) and are expected to fall at a similar pace next month (-26%)
• Stock levels (in relation to expected sales) eased to their lowest level since March (+19% from +29%; long run average +18%).
• Internet sales grew (+46%) at a pace broadly in line with the long-run average (+45%), with a similar rise expected next month (+48%).
• Employment in the retail sector fell sharply (-45% from -20% in May), at the sharpest pace since February 2009, with a faster fall expected in the quarter ahead (-52%).
• Investment intentions for the year ahead remained negative, but to a lesser extent than in May (-32% from -55%).
• Retailers expect the business situation to improve moderately over the next three months (+7% from -33% in May).
• Wholesalers saw sales fall at a somewhat faster pace than last month (-30% from -22%) but expect an easing in the decline in the year to September (-18%).
• Motor traders posted their second consecutive month of growing sales (+32% from +18%), with another rise expected next month (+17%).