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 Astrological signs are almost all wrong, as movement of moon and sun throws out zodiac
- 2 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 3 The West has it totally wrong on Lee Kuan Yew
- 4 Watch: Man takes selfie every mile of 2,600 mile hike, creates amazing timelapse video
- 5 The day I starred in Only Fools and Horses
Germanwings plane crash: Andreas Lubitz 'had eyesight problems' and woke from nightmares 'screaming we’re going down'
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Revealed: Putin's army of pro-Kremlin bloggers
The West has it totally wrong on Lee Kuan Yew
Germanwings plane crash: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...