View from City Road: Optimism with reservations
Tuesday 20 July 1993
But do not get carried away with enthusiasm. The survey also casts doubt on the strength of recovery in the next few months since it shows retailers may have made a serious planning error. They have heavily overstocked their shelves and will probably cut back their orders from manufacturers.
By a majority of more than two to one retailers told the CBI that trade was more buoyant in June than a year earlier - the most upbeat response since April 1990. Similarly, there has been a sharp improvement in the number of retailers reporting good trade for the time of year.
Economists at Midland Global Markets have studied the past relationship between the CBI survey and the Central Statistical Office's sales data, and derived rules of thumb to predict the official figures.
These suggest that the volume of high street spending rose by more than 1 per cent between May and June after adjusting for normal seasonal patterns, which would put it back on a firmly rising trend.
A rise in spending should come as no surprise following last week's inflation figures. These showed the biggest June falls in clothes and household goods prices since the 1950s - clear evidence that the summer sales have started early.
Unfortunately, this appears to have been the result of retailers' earlier over-confidence. Since March, they have consistently overestimated their sales and dramatically increased orders from suppliers.
But the goods have stayed on the shelves. Unwanted stocks have risen to a 14-month high and orders are now being scaled back. Although the price cuts appear to have revived spending from the doldrums of the past few months, retailers still expect to be saddled with much larger stocks than they want.
This over-optimism helps to explain why factory output has surged as domestic demand has remained subdued, while many of Britain's export markets have slipped deeper into recession. Retailers are now facing reality, and manufacturers may soon have to do so as well.
- 1 Planes go hybrid-electric in important step to greener flight
- 2 Antonio Martin shooting: Police and protesters clash over teenager's death just five miles from Ferguson, Missouri
- 3 British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
- 4 Hip hop is both racial and political, and for Iggy Azalea to suggest otherwise is insulting
- 5 Man hospitalised with pneumonia after downing eggnog at office Christmas party
Antonio Martin shooting: Black teenager may have tried to ambush patrolman, says police officer's lawyer
Orphan kangaroos spend Christmas without their parents
Northern Lights above Britain: Stunning Aurora Borealis illuminates Northumberland sky on Christmas Eve
New route to Mars could make manned mission much cheaper and easier
Isis 'did not shoot down Jordan war plane' before capturing pilot, says US
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...