Suffering department stores temper retail sales growth in November

Consumers' appetites for spending increased slightly in November as the UK high street saw growth again. Retail sales picked up 0.3 per cent in November, in line with expectations and following October's disappointing 0.9 per cent drop.

Figures released by the Office for National Statistics showed that, year-on-year, sales were up two per cent from 1.8 per cent a year previously. They missed expectations, however, which were for a 2.3 per cent increase.

Clothing saw strong growth (3.8 per cent), with colder weather encouraging more buying. But that was offset by drops in amounts bought in department stores (which fell 3.1 per cent - the worst performance since February 2011), petrol stations and food stores.

It was good news for small shops, which saw growth of 4.5 per cent, compared with the 2.9 per cent increase their larger counterparts experienced.

Yesterday, a survey by the Confederation of British Industry (CBI) showed that the retail sector found renewed momentum at the beginning of December, after October and November's feebler sales.

Almost half of 106 firms surveyed by the CBI up to 11 December said that sales volumes were higher than a year earlier, while 14 per cent said they were down, giving a balance of 34.

But as IHS Global Insight’s Howard Archer points out, a squeeze on purchasing power means many people have left Christmas shopping until late, so a significant number of retailers have been heavily discounting in the run up to Christmas because of the sluggish sales in October and November.

Capital Economics said of today's numbers:

November’s growth may not be enough to secure another quarterly expansion in sales volumes in the fourth quarter. Indeed, if volumes were to remain unchanged in December, this would leave them 0.6 per cent below the third quarter average. The foundations for a sustainable rise in spending should be stronger in 2014, with real earnings on course to start growing again and employment continuing to rise. For now, though, consumers are still spending fairly cautiously.