Retailers add more staff to end 10-year decline

Retailers took on more staff for the first time in nearly a decade in May as stores geared up for an anticipated sales boost this summer.

The CBI, whose latest survey of the retail sector covered the first two weeks of May, said responses indicated the recruitment drive will continue into June.

It also found that some 43 per cent of retailers saw an increase in sales volumes compared with a year ago, while 23 per cent reported a fall. The balance of plus 21 per cent was the best result since April of last year and was accompanied by an upturn in sentiment about trading conditions over the next three months.

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The sales improvement was driven by grocery stores, department stores and furniture and carpet retailers, although the CBI noted that the majority of respondents said sales were still below average for the time of year.

The number of people employed in the retail sector increased on a year ago – ending a decline dating back to February 2003 – and a majority expect to recruit more staff compared to a year ago in June, the industry group added.

The optimism comes as retailers hope for a busy summer, with the Queen’s Diamond Jubilee celebrations and the Olympics set to boost sales.

“It’s encouraging to see high street sales up compared to a year ago, and that business sentiment about the next three months has improved,” said Judith McKenna, chief operating officer of Leeds-based supermarket chain Asda, who chairs the survey panel.

However she warned that high unemployment, slow wage growth and weak consumer confidence would keep retailers under pressure in the short term.

Trading conditions have been helped by an easing in inflationary pressures, although the CBI said year-on-year comparisons remained robust.

Howard Archer, economist at IHS Global Insight, said: “While the CBI survey suggests that consumers were more active in May, they are clearly still cautious in their spending and this is likely to remain the case over the next few months.”

A separate CBI survey on Monday showed that services firms’ confidence rose to the highest level in a year in May and they forecast a pick-up in business in the next three months.

The quarterly poll offers hope that stronger growth in the dominant services sector will help prevent another economic contraction between April and June.