High street sales slow down but trend still upward for economy

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RETAIL sales grew at a slower pace this month, but the underlying trend still looks healthy as consumer confidence improves, according to the latest survey by the Confederation of British Industry.

Sales balance eased in May to plus 16 from plus 30 in April and below economists’ forecasts of plus 35.

The survey of 136 firms showed retailers predict a pick-up in sales next month, with the index for June sales expected to reach plus 29.

Barry Williams, chair of the CBI Distributive Trades Survey Panel and Asda SVP and chief merchandising officer for food, said: “Retailers’ predictions of further sales growth bore fruit this month.

“Although that growth was at a slower rate than expected, the fact we’ve seen a steady increase for six consecutive months is a sign we’re heading towards sustainable growth and strengthening consumer optimism and it’s good to hear shopkeepers telling us they expect even stronger figures next month.”

Consumer demand, buoyed by a strengthening housing market, has been the main driver of the UK’s rapid economic recovery.

In the CBI’s quarterly survey, the business situation index was plus 13 in May, down from plus 18 in February.

Retail sales rose for the sixth consecutive month in May, but were down on April after grocers reported a slower rise.

The big four grocers – Tesco, Asda, Sainsbury’s and Morrisons – are battling for customers with German discount chains Aldi and Lidl.

The CBI said sales rose solidly in furniture & carpets, clothing and chemists, with the latter seeing the first annual rise in sales since October 2013.

However, department stores’ volumes declined on a year ago.

Internet retail sales also rose robustly, but at the slowest pace since June 2013. Employment in the sector was broadly flat in the year to May, but is expected to pick up slightly next month.