UK retail sales improve in May

CBI poll of its retailers finds that 43% reported an increase in sales on a year ago, but sales remain below average for May

Retail sales improved in May, but remain below average for the time of year, according to a survey by the CBI.

The business lobby group said a poll of its retailers found that 43% reported an increase in sales on a year ago, compared with 23% that said they experienced a fall, giving a ’rounded’ positive balance of 21%.

The rebound in May following a downbeat April will cheer the Treasury, which is keen to see signs of a recovery in consumer confidence and a revival in spending.

However, the better-than-expected figures are unlikely to make up for lost ground in the first four months of the year and defy a raft of surveys showing a dearth of shoppers on the high street.

Judith McKenna, Asda chief operating officer and chair of the CBI distributive trades panel, said the survey shows business sentiment about the next three months has improved.

“However, sales are still below the average for the time of year and the combination of high unemployment, slow wage growth and weak consumer confidence means that the retail sector is likely to remain under pressure in the short term.”

Official figures last week revealed that Britain’s double dip recession is deeper than first thought. The ongoing euro crisis has also proved unsettling and is likely to delay the major spending plans of some consumers, though anecdotal reports from London and the south east point to a degree of crisis fatigue among shoppers and a return to higher levels of spending.

The majority of retail sectors saw sales increase, said the CBI, notably grocers, department stores and shops selling furniture and carpets.

There was also encouraging news of a rise in the number of people employed in the sector. The number of jobs increased on a year ago, for the first time since February 2003, after a balance of 12% of retailers reported taking on more staff. The majority of employers plan to maintain staffing levels or increase them next month.

Looking ahead, retailers are less downbeat than they were a few months ago at the height of the euro crisis, with most expecting the business situation to be stable over the next three months.

A rival survey by the British Retail Consortium found that April was responsible for the biggest monthly plunge in retail sales volumes. While heavy rain undoubtedly played a part in the figures, analysts expect sales to remain depressed while the UK struggles to grow and the eurozone’s woes persist.