Sarah Green column

In Newcastle, during holiday season, we expect to see Northumberland Street and the MetroCentre heaving with locals and tourists delighting in our excellent shopping experience.

In Newcastle, during holiday season, we expect to see Northumberland Street and the MetroCentre heaving with locals and tourists delighting in our excellent shopping experience.

The excellent news for the retail sector is that this August's sales have exceeded even the retailers' expectations.

The CBI's Quarterly Distributive Trades Survey last week showed retailers experienced the fastest year-on-year growth for 20 months.

Positive sales growth will come as welcome news for retailers, who were expecting sales to be only marginally better than a year ago during August. For the first time in over two years, retailers considered sales to be good for the time of year, indicating that this summer's figures were given a greater-than-average boost by the holiday period.

While 33% of retailers surveyed said sales were down on a year ago, 45% reported sales were up. The positive balance of 12% is the strongest since December 2004 (33%). Expectations are for similar growth of approximately 13% in September.

In the face of tough competition, retailers have previously engaged in heavy discounting but - with the rising costs of energy and foodstuffs - they are now starting to increase prices. For the first time in two years, average selling prices rose in August (a balance of 12%) and firms expect them to continue to rise, albeit at a more modest rate.

The grocery and durable household goods sectors achieved the fastest growth in sales. Grocers recorded their strongest balance (57%) since December, while sales of durable household goods also showed no sign of abating (51%).

Other businesses achieving an increase in sales included the small high street units - confectioners, tobacconists and newsagents - who recorded their first positive balance since March.

But sales volumes for motor traders, a strong sector in the North-East, fell back after a rare month of positive year-on-year sales growth in July. And a greater balance of motor traders expect to see a fall in year-on-year sales next month.

Firms are increasingly optimistic - a balance of 10% expects the overall business situation will improve over the next three months.

However, it is early days and many fear the speculated further increase in interest rates may put a sudden halt to upbeat results.

Sarah Green is regional director of the CBI.

 

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