Retail sales fell this month compared to the same period last year, while headcount fell sharply, according to a survey.
In the sentiment survey released by the CBI, volumes slipped to a balance of -10 percent after posting 5 percent growth the previous month.
Retailers also said their workforce had fallen at the fastest rate since February 2009 after the financial crisis. The employers’ group survey is the latest to show that weak sales and more than a year of rising costs have meant retailers are reluctant to hire new staff.
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The survey of 123 respondents, including 46 retailers, asked business leaders whether their company’s performance had increased or decreased on a specific metric, and weighted the responses based on company size to achieve a balance of -100 percent to 100 percent, where a positive number indicates growth.
Companies’ investment intentions have also fallen more sharply than at any time since May 2020 during the first pandemic lockdown.
A separate study by the Recruitment and Employment Confederation found that the number of people hired for full-time jobs fell at its fastest pace in more than two years in April, while the number of temporary workers continued to rise.
Martin Sartorius, Chief Economist at the CBI, said: “Retailers continue to face a challenging trading environment, with companies reporting disappointing sales and huge inflationary pressures. As a result, they have to reduce their workforce and their investment plans.”
However, there are reasons for retailers to be more optimistic, he said: “Consumer sentiment has improved and household energy bills are expected to come down from July.” The resulting surge in income should help support retail sales in the second half of the year. “
Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, said household incomes would benefit from the cut in the energy price cap announced yesterday and an expected slowdown in the pace of price increases in the coming months, but rising mortgage costs and a cautious attitude would benefit employers offset some of the benefits.