Retailers have slashed jobs at a record rate as the recession tightens its grip on the high street, data out today revealed.
Figures from the CBI business group's February distributive trades survey showed a balance of 49 per cent of retailers said they had cut their workforce, the biggest since the quarterly survey began in 1983. And a record balance of 45 per cent said they planned to reduce their headcount in March.
But the survey showed a better-than-expected performance from the high street in the first half of the month, with a 25 per cent balance of firms reporting sales volumes declined year-on-year, the highest since June and a marked improvement on the 47 per cent balance in January.
The figures were up on the 52 per cent balance of retailers who had predicted sales would fall in the month and defied grim forecasts over the effects of heavy snowfall in the first week of February.
Official figures from the Office for National Statistics (ONS) have been better than the survey data in recent months, with the latest release showing an unexpected 0.7 per cent hike in January sales.
Vicky Redwood, UK economist at Capital Economics, said the sales rebound in February was "surprisingly strong" but warned this was unlikely to be a sign of sustained recovery for the sector.
"While aggressive price cutting may have explained the strength of spending in January, the longer the rebound in sales continues, the more likely it is that consumers are just spending the cash freed up by falling mortgage payments and energy prices," she said.
"However, we think that further sharp rises in unemployment and falls in house prices will mean that consumers soon start to save this extra money instead."
Andy Clarke, chairman of the CBI Distributive Trades Panel and chief operating officer of Asda, said: "February was another tough month and sadly many retailers are cutting jobs as shoppers stay away and the recession deepens.
"But conditions were not quite as harsh as they were last month and in the run up to Christmas.
"March looks similarly testing but we hope that, as the year goes on, lower interest rates and falling inflation will encourage a pick-up in spending."
Grocers reported a strong improvement in performance in the period, with a balance of 60 per cent reporting an increase in sales volumes on a year ago.
Footwear and leather sales also grew - with a balance of 39 per cent reporting improved volumes.
But other retailers continued to report steep declines, particularly in sectors hit by the contracting property market. The hardware, china and DIY and durable household goods sectors each saw a balance of 86 per cent of retailers reporting sales had dropped.
The downturn in consumer spending also struck books and clothing retailers, who reported slumping sales by a balance of 80 per cent and 74 per cent respectively.
Motor traders' sales fell again, though the balance of 50 per cent reporting a drop was not as weak as January's 68 per cent or December's 100 per cent. In a sign of pessimism in the sector, a net 53 per cent expected to cut headcount in March.
A balance of 38 per cent of retailers reported increases in average selling prices over the year to February.
But retailers' confidence in their sector remains low, with a balance of 26 per cent expecting the business situation to worsen over the next three months. And investment intentions remain very weak, with a balance of 44 per cent expecting to cut expenditure, but these were not as bleak as November, which saw a negative balance of 57 per cent.Reuse content