The Confederation of British Industry (CBI) reported on Tuesday its latest survey of retailers showed retail sales volume balance climbed to +60 in the year to August from +23 in July. This was the highest reading since December 2014.

Economists had forecast the reading to ease to +20.

The report also revealed that retail sales volumes were expected to grow at a slower, but still strong, pace (+39) next month. Meanwhile, the retail orders balance increased at a survey record pace (+68 in August (a record since July 1983), up from +49 in July) but was seen to grow a slower, yet still solid, pace (+55%) in September. In other survey results, average selling prices in the three months to August rose at the quickest pace since November 2017 (+73) and were forecast to grow at a similar pace next month (+75). Employment in the retail sector decreased for the 19th consecutive quarter in the year to August (-13), but at the slowest pace since November 2019, and was expected to fall next month (-9), albeit at a slower pace. Investment intentions for the next 12 months (compared to the previous 12) improved to the highest level since February 1994 (+36).

“A ramping-up in retail sales growth in the year to August shows just how much consumer demand continues to spur economic recovery,” noted Alpesh Paleja, CBI Lead Economist. While sales growth is set to remain strong, a more definitive shift in household spending towards consumer services is anticipated later in the year – leading to greater normalisation of growth in the retail sector. Furthermore, there are signs of operational challenges still biting, with stock levels reaching another record low and import penetration falling. Disruption is being exacerbated by continued labour shortages, with many retailers reliant on younger employees currently awaiting their jab.