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No sign of upturn for high street retailers

The UK high street remained under intense pressure in May as sales plunged at their fastest pace in more than a year.

There was no sign of an upturn after retailers were hit by bleak weather in March and a subdued performance over Easter, CBI figures showed. It meant retail activity has weakened persistently so far in 2013.

Despite hopes for improvement in the wider economy, firms reported falls in clothing and footwear sales, although the grocery sector was flat and furniture, carpet and recreational goods sales lifted.

The survey of 69 firms found there were modest hopes for a better performance next month, but plans for investment among retailers were at their weakest since the start of last year.

Overall, around 23% of companies said sales volumes were up on a year earlier and around 33% said they were down, giving a rounded balance of -11% – the lowest since January 2012 and a worse decline than expected last month. It comes after latest official figures showed households being squeezed with wages growth of 0.4% at a level well below the rate of inflation.

Barry Williams of Asda, chair of the CBI's survey panel, said: "Retail sales growth has weakened since the start of the year as households continue to feel the pinch, with wages failing to keep pace with the cost of living.

"There is positivity from retailers this month, however, with sales expected to rise in the coming months."

The data fuelled fears that overall growth could be held back, with consumers remaining reluctant to open their wallets again, and the malaise appears to run deeper than a temporary setback caused by the weather.

Figures out yesterday suggested that the overall services sector – the powerhouse of the wider economy – was improving, led by a surge in the performance of hotels, bars and restaurants.

But today's survey shows that among retailers, conditions are still bleak. Orders with suppliers compared to a year ago were down, with a balance of -25%, the lowest since November 2011.

Overall, a 10% balance expected sales volumes to go up in June with a similar balance of optimism for the next quarter. But retailers appear reluctant to invest, with a negative balance of -23% planning to invest over the next year.

Belfast Telegraph