Retail sales show slight growth

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The Independent Online

Retail sales ended four months of falls in September as grocers and shoe shops saw better than expected trading, a survey revealed today.

A slight growth in sales during the month and indications that retailers expect levels to remain broadly flat in October was described as "encouraging" by the CBI business group.

Its distributive trades survey showed 39 per cent of retailers said sales volumes rose in September, while 36 per cent said they fell.

The resulting balance of 3 per cent compared to minus 16 per cent in August, was better than expected and is the first positive number for the survey since April.

In individual sectors, grocers and footwear and leather retailers continued to report strong year-on-year growth and despite falls for all other areas, clothing, furniture and carpet stores saw the rate of decline ease on the month.

Motor traders' sales volumes were broadly flat as the Government's cash-for-bangers scheme helped prop up the sector.

But respondents, who were surveyed before the scrappage programme was extended this week, predicted a sharp fall off in sales next month.

Andy Clarke, chairman of the distributive trades panel, said: "After such a difficult summer, it is encouraging to see signs that conditions in the retail sector are stabilising.

"However, with unemployment rising, wage growth low, and consumers building up their savings, spending is likely to remain subdued for some time.

"Grocers and shoe shops are continuing to enjoy solid growth, while car-makers are seeing sales volumes hold steady, thanks to the scrappage scheme.

"After months of heavy de-stocking, retailers may now be starting to think about getting new products on the shelves."

Vicky Redwood, UK economist at Capital Economics, said the survey suggests retail sales had a "particularly good month in September".

The figures cover the month until September 16, which means easier comparisons caused by the collapse of Lehman Brothers in 2008 are not included.

"We still have our concerns about the outlook for sales next year, as the fiscal tightening and weakness in the labour market take their toll," she said.

"Nonetheless, for now, retail sales are clearly doing rather better than we might have expected."

The survey showed that volumes of orders fell modestly, with a balance of minus 4% representing the slowest rate of decline since February 2008. Orders are expected to stabilise next month.

A three month moving average of sales volumes, which smoothes out peaks and troughs, also improved to a balance of minus 9 per cent, compared with minus 16 per cent in August.

But retailers were still experiencing tough conditions, as a net 22 per cent described volumes as below average for the time of year.