UK Economy: Pessimistic Retailers Shed Jobs Ahead Of Christmas
Retailers have been cutting back staff as high street sales volumes fall for the sixth consecutive month, according to the Confederation of British Industry's (CBI) distributive trades survey.
A full 40% of retailers have cut headcount, with 13% adding staff, amounting to a balance of 27%, the CBI said. This is the fastest rate of cuts since November 2009. Sales volume numbers were down by a balance of 39%, the worse performance since March 2009, and were below average for the season, leading to worries ahead of the vital Christmas shopping period.
Clothing stores have been particularly hard hit, in part due to the unseasonably hot autumn, however, specialist food and drink retailers, grocers and department stores are also feeling the pinch.
“Retailers remain hard-pressed, even as we get closer to Christmas, Ian McCafferty, the CBI's chief economic adviser, said. “The relatively mild weather this autumn has hit clothing stores particularly hard, and retail sales are down year-on-year for the sixth month in a row.
“Retailers may be hoping that shoppers will loosen their purse strings in the run up to Christmas, but consumers are likely to remain cautious about spending given the uncertain economic outlook.”
Price inflation remains well above average, the CBI said, and retailers are scaling back on their investment plans.
With domestic consumption a major component of gross domestic product (GDP), the figures, coming on the eve of the chancellor's autumn statement, which is expected to include a number of measures - including credit provision to small businesses and investment in infrastructure - aimed at boosting the country's sluggish growth.
Howard Archer, chief UK and Europe economist at IHS Global Insight, called the figures "dismal" and warned that a battle of will could now take place in the run up to Christmas, with consumers holding out and waiting for sales and retailers waiting for the last minute to offer discounts.
"The reluctance of consumers to spend is worrying for fourth-quarter GDP growth prospects and it is obviously particularly worrying for retailers given that Christmas is the key period of the year for most of them," Archer said.
"And unsurprisingly retailers are pretty pessimistic about sales prospects in the absolutely key month of December, which is hardly surprising given sharply squeezed purchasing power, mounting unemployment and depressed and falling consumer confidence."
High rates of unemployment and stagnant wages - with little chance of improvement in the short term - mean that the prospects for consumer spending are dim, with confidence stuck near record lows, Archer added.
"Retailers will be desperately hoping that consumers ultimately decide to loosen their purse strings in December to have a good time after a difficult year. However, recent data highlight the major pressures currently facing consumers… So it is hard to be optimistic over the prospects for consumer spending."