and DIANE COYLE
There were new signs of a recovery on the high street yesterday, even as the City waited for the Chancellor to cut the cost of borrowing for the third time in four months in order to stimulate the economy.
New figures from the Confederation of British Industry and the John Lewis Partnership confirmed a pick-up in retail spending. But the CBI said signs of weakness in manufacturing justified an interest rate cut. A quarter- point reduction in base rates is widely expected this morning after yesterday's meeting between the Chancellor, Kenneth Clarke and Eddie George, the Governor of the Bank of England.
The CBI's survey of the distributive trades showed that the volume of retail sales rose for the fifth-month running in February. The momentum of spending had extended beyond Christmas and the January sales.
John Lewis recorded record profits of pounds 150m in the year to January 1996 with both department stores and the Waitrose supermarkets turning in impressive performances. This was not only 28 per cent higher than the pervious year's figure of pounds 117m but also higher than the previous record of pounds 131m achieved in the boom year of 1988/89. Sales were 9 per cent higher at pounds 2.8bn. The partnership's 35,000 staff will share pounds 57m of the profits. This means a 15 per cent bonus which is equivalent to eight weeks salary each. Though well short of the 24 per cent bonus received during the late 1980s retail boom it is double the level of three year's ago.
Stuart Hampson, chairman of John Lewis, said there were signs of recovery in the high street and the housing market, with sales of furnishings and television and audio equipment up strongly. "Something is happening," he said. "There may not be a feel-good factor but there is a `feel-not- so-bad' factor."
Comment, page 19