British retail sales fell at a slower pace in May than in April but expectations for next month were at their most pessimistic in nearly 13 years, an industry survey showed yesterday, the latest evidence of a broad consumer slowdown.
The Confederation of British Industry's monthly distributive trades survey showed 33 per cent of retailers reported sales volumes up on the year but 41 per cent said they were down, giving a balance of -7, allowing for rounding.
Analysts had predicted a balance of -8 and May's out-turn was also an improvement on the balance of -14 in April, which was the lowest in 13 years.
Retailers' expectations, however, slipped further, giving an expectations balance for June of -5, the lowest for the upcoming month since August 1992. The three-month moving average of sales volumes, a better measure of the trend, also fell to its lowest since August 1992.
British government bonds rose further after the figures were released as they supported a growing view that interest rates have peaked at 4.75 per cent and may even have to come down later this year to shore up confidence.
The CBI said its quarterly business situation balance also slipped, to +1 in May from +8 in February.
"Broadly speaking, the categories of goods most closely correlated with housing transactions have fared worse than the average over the past year," said John Longworth, executive director of ASDA and chairman of the CBI's survey panel.
The CBI also said that investment intentions fell sharply in the latest quarter, giving a capital expenditure balance of -25 compared with +2 in February, the lowest since August 1991 when it was -27.
Employment in the retail sector fell for a fifth consecutive quarter, the longest such string of falling retail staff numbers since 1995, the CBI said, adding that the falls over the past year have come more in full-time rather than part-time staff.
Most surveys of retail sales in recent months have been decidedly negative although the latest official data for April showed an unexpected bounce.
But few doubt that five Bank of England interest rate hikes between November 2003 and August are still taking effect.
UK sportswear chain JJB Sports Plc last week was the latest in a long list of well-known high street retailers to report tough trading conditions.