Retailers in hiring mood as high street gets triple boost

The UK's retailers embarked on the biggest hiring spree for more than a decade in August as a feelgood cocktail of good weather, sporting success and a royal baby kept consumers spending, the CBI said yesterday.

Its survey for the first two weeks of the month, which covered 125 businesses, revealed a 16 per cent balance of firms taking on staff – the strongest since May 2002.

A 27 per cent balance, meanwhile, reported overall sales higher than a year earlier, marking the best overall month for the high street since last November. Optimism is also at a three-year high.

The CBI reported broad-based growth as shoppers splashed out on clothes, barbecue food and recreational goods such as CDs, DVDs, toys, games and sports gear. "The feelgood factor from the heatwave, summer sales, royal baby fever and sporting victories has helped boost the high street," Barry Williams, chairman of the CBI's distributive trades survey panel, said.

The latest good news comes after much broader official statistics based on 5,000 retailers showed sales jumping 1.1 per cent in July, a far bigger-than-expected increase that leaves retail sales 3 per cent ahead of a year earlier.

Retailers expect the sales momentum to continue into September but the CBI also warned that inflation – currently still at 2.8 per cent and well ahead of annual growth in wages – could limit the consumer recovery.

"The bottom line is that confidence will not bounce back fully until family finances improve further," Mr Williams added.

"This isn't a time to rest on our laurels as shoppers may return to cautious spending until they see a sustained improvement to the pound in their pocket or – dare I say it in August? – until the festive spirit kicks in".

Economists said that the buoyant spending had put the UK on course for a third successive quarter of growth following an upwardly revised 0.7 per cent advance between April and June.

BNP Paribas' David Tinsley said: "Most sectors of the economy appear to be stepping up, with the consumer-led ones in the lead.

He added: "From the admittedly sketchy indicators for the third quarter so far, it would be a surprise if GDP growth was not at least as good as the second quarter."