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UK sales and confidence dips

News, 02 November 2015

LONDON: A dip in consumer confidence and slower growth in retail sales last month signal some concern about prospects for the UK economy, two new surveys suggest.

According to the Confederation of British Industry (CBI), its survey of 112 firms showed a net balance of +19% reporting that sales volumes were up on a year ago.

That represented a marked downturn from a strong positive balance of +49% in September and the worse-than-expected findings – +51% was expected – was the lowest balance since April.

However, the CBI remained relatively upbeat, pointing out that the slowdown in the pace of growth was "slight" and that sales were above average for the time of year.

"Growth in sales and orders for high street retailers remains resilient, but there has been a slight slowdown in the pace of that growth following a strong September," said Rain Newton-Smith, the CBI's director of economics.

"Internet sales are starting to ramp up again as we head towards Christmas and we would expect them to continue this positive pattern until the end of the year," she continued.

"Low inflation and improving wages mean the prospects for sales growth are decent, but challenges remain, like the weakening global economy and competitive pressures in the retail sector, so we can't take this positive outlook for granted."

Meanwhile, research firm GfK revealed that its monthly consumer sentiment index had fallen to a four-month low of +2 in October from +3 in September.

Three of the five measures used to calculate the index saw decreases in October, although the overall index and most of its measures were still more positive than a year ago.

"The good news on the domestic front – with households lifted by wage growth, low interest rates and near-zero inflation – is being tempered by concerns about our ability to shrug off the global downturn," said Joe Staton, GfK's head of market dynamics.

However, he went on to emphasise that the overall index score has remained positive in 2015 in marked contrast to the lows between mid-2007 and early 2014.

Data sourced from CBI, GfK; additional content by Warc staff