Press release

25 May 2021 London, GB

May CBI survey softer than expected but still shows consumers spending at reasonable rate – EY ITEM Club comments

May CBI survey softer than expected but still shows consumers spending at reasonable rate – EY ITEM Club comments

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Related topics Growth COVID-19
  • The May CBI distributive trades survey was less strong than expected, but still pointed to consumers spending at a reasonable rate after a strong start to Q2
  • The CBI’s sales balance edged back to a still decent +18% in May after rising to +20% in April (the highest level since September 2018) from -45% in March. This was buoyed by non-essential retailers being closed throughout the corresponding period in 2020
  • The survey indicates that retailers are relatively upbeat about sales prospects in June, with a balance of +16% expecting sales volumes to be up year-on-year. This is backed up by strong investment intentions, although employment plans are weak
  • May’s limited change in the sales balance follows the latest Office for National Statistics (ONS) data showing retail sales volumes rose 9.2% month-on-month in April. Additionally, it still appears that the economy saw a decent performance in May after a strong start to Q2 in April
  • Retail sales should benefit from non-essential retailers now being open. However, some spending from the retail sector may be diverted away by the hospitality sector fully opening up on 17 May
  • While the May CBI distributive trades survey is softer than expected, it does not alter the EY ITEM Club’s belief that consumers are well-placed to play a key role in robust UK recovery developing from Q2
  • Consumer activity should benefit from recent very high savings ratios, especially as the labour market has been resilient and has even lately shown improvement. Consumer confidence has also strengthened markedly

Howard Archer, chief economic advisor to the EY ITEM Club, says: 

“The May CBI distributive trades survey points to retail sales being at a relatively decent level in May after a significant increase in April. Hard data from the Office for National Statistics (ONS) showed retail sales volumes rose 9.2% month-on-month last month.

“The CBI’s sales balance edged back to +18% in May after rising to +20% in April – the highest level since September 2018 – from -45% in both March and February, and -50% in January, which had been the lowest level since last May.

“The April and May balances were lifted by the fact that non-essential retailers had been closed throughout the corresponding period a year earlier. The CBI reported that retail sales volumes were seen as broadly in line for the time of year in May.

“The CBI said that wide disparities remain evident within the retail sector, and ‘while grocers, non-store retailers, hardware & DIY, and furniture & carpets retailers reported that sales were significantly above seasonal norms, sales were below normal in clothing and specialist food.’

“With non-essential retailers now open, retailers were reasonably upbeat about sales prospects in June. Specifically, a balance of +16% expect retail sales volumes to be up year-on-year in June. Furthermore, investment intentions in the sector were the highest since February 1994. 

“However, employment intentions in the sector remained weak in contrast to generally recent upbeat news on the labour market.”