UK retail sector sees fragile recovery

The UK retail sector is making a comeback with the rest of the economy.  A report from the Confederation of British Industry (CBI) shows that the high street is growing faster than at any time since the beginning of the recovery last September.

Almost half of high-street retailers report that their sales have gone up since this time last year, while just over ten percent said their receipts are down.

Perhaps best of all, growth hasn’t been limited to one division of the retail sector, with retailers of all stripes showing improvements, from furniture retailers to car dealers.

The sales balance for September – the difference between those with positive and negative growth – rose to +34 this September. But chief executives are warning, quite sensibly, that much like the rest of the economy, the retail sector isn’t “out of the woods” just yet.

Fragile recovery 

Consumer confidence is improving but remains low, which may be aligned with wage stagnation and cost of living rises. With the price of rent – particularly in London – going through the roof, the majority of people are finding themselves with less and less disposable income each month.

This is obviously a problem for the retailers who depend on people’s disposable income. While a rise in employment (and confidence), as well as the uptake in right-to-buy schemes has seen furniture retailers benefitting from home improvements, the recovery is still both weak and fragile.

Business Secretary Vince Cable recently broke ranks from the government to warn that the recovery could be the result of another housing bubble. If that’s the case, it isn’t just retailers who ought to worry.