Retailers report worst figures for a decade

DEEPENING gloom on Britain's high streets threatens to snuff out any tentative signs of economic recovery, the latest distributive trades survey from the Confederation of British Industry suggests today.

High-street spending was more depressed for the time of year last month than at any point since the early 1980s, retailers report. The survey does not bode well for Wednesday's official retail sales figures, which the City expects will show spending unchanged between June and July.

'Retailers, almost across the board, report that sales volumes are down on a year ago,' Andrew Sentance, the CBI's economics director, said.

The CBI's gloomy findings follow a week of relatively cheering news for the Treasury. Manufacturing output rose unexpectedly in June, while inflation showed a surprising fall in July. Unemployment rose more sharply in July than forecast, but less than had been feared by some City pessimists.

Figures for national output between April and June, due on Wednesday, are expected to show the first rise in gross domestic product - excluding North Sea oil - since the recession began in the third quarter of 1990.

However, retailers report that spending last month was well down on the previous year. Some 48 per cent reported lower sales, compared to 33 per cent reporting a rise. The net balance of 15 per cent reporting lower sales was the most depressed figure since the survey began in 1983.

This is the second consecutive month - and only the third in the past year - to show sales more subdued than 12 months earlier. The rate of decline on last year has accelerated sharply from the 3 per cent negative balance in June. Retailers have reported trade worse than they expected in the previous month in four of the past five months.

Furniture, carpet, hardware and DIY shops all reported sales to be falling increasingly far behind last year's levels. Only chemists, confectioners and 'other goods' retailers reported a significant improvement on the year.

After being disappointed by the level of sales in four of the past five months, retailers are now expecting for the first time since January that sales will be down on the previous year. However, sales are expected to be less depressed relative to last year than they were in July.

Grocers expect August sales to pick up, while clothing, footwear, carpet and furniture shops expect sales to get worse, but less quickly. Hardware and DIY shops expect sales to fall further behind last year's level.