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UK retailers buoyed by October sales growth UK retailers buoyed by October sales growth
(about 20 hours later)
Hopes that the UK economy is on the mend were boosted on Tuesday when the latest snapshot of high street spending showed strong growth in retail sales. Consumers shrugged off concerns about the state of their finances to spend more freely in the shops last month, according to two surveys providing mixed messages about the state of the economy.
The CBI's monthly distributive trades survey showed consumers responding to falling inflation by spending far more in October than had been expected. Hopes that the UK might be on the road to recovery were boosted by the latest snapshot of high street spending from the CBI showing the strongest retail sales growth since the summer coupled with a belief among shops and stores that business in November would also be brisk.
But a separate report from GfK showed already fragile consumer confidence weakening by two points to -30 as the short-term fillip from the Olympics faded.
Nick Moon, Managing Director of Social Research at GfK, said: "Just as the economy moves out of recession consumer confidence dips again. While we are not quite back to the levels of this time last year, the index has not been this low in six months.
"While the Olympics are thought to have boosted GDP in the last quarter, the late Summer boost in consumer sentiment has now faded. The government will be concerned that the economic bounce will follow a similar path and deflate during the Autumn."
Moon added: "The fragility of the recovery is underlined by the fact that people are more worried about their own financial situation over the next 12 months. This certainly doesn't suggest there will be a spending boom on the back of the official emergence from recession."
The CBI survey showed consumers responding to falling inflation by spending far more in October than had been expected.
Almost half of retailers questioned (47%) said business was up last month on a year earlier, while 17% said sales were down. The balance of +30 points was the highest since June, when spending was lifted by the extra bank holiday for the Queen's diamond jubilee.Almost half of retailers questioned (47%) said business was up last month on a year earlier, while 17% said sales were down. The balance of +30 points was the highest since June, when spending was lifted by the extra bank holiday for the Queen's diamond jubilee.
Retailers were confident that business would remain brisk in November as the builid-up to the key Christmas period began. Retailers were confident that business would remain brisk in November as the build-up to the key Christmas period began.
Anna Leach, the CBI's head of economic analysis, said: "It is great news that last month's sales growth has continued into October, at a much faster pace than expected, and that this momentum is expected to continue next month too.Anna Leach, the CBI's head of economic analysis, said: "It is great news that last month's sales growth has continued into October, at a much faster pace than expected, and that this momentum is expected to continue next month too.
"Falling inflation has somewhat eased pressures on family budgets, so that households are a little more willing to spend. But there's still a risk that ongoing uncertainty over the global economic outlook could dent consumer confidence, hitting prospects for the retail sector, while the scope for inflation to fall further is limited.""Falling inflation has somewhat eased pressures on family budgets, so that households are a little more willing to spend. But there's still a risk that ongoing uncertainty over the global economic outlook could dent consumer confidence, hitting prospects for the retail sector, while the scope for inflation to fall further is limited."
The CBI said there was an across-the-board pick-up in spending, led by clothes stores and furniture and carpets outlets. Clothing posted its first year-on-year sales growth in three months, while supermarkets also reported the sixth consecutive annual increase in volumes. The CBI said there was an across-the-board pickup in spending, led by clothes stores and furniture and carpets outlets. Clothing posted its first year-on-year sales growth in three months, while supermarkets also reported the sixth consecutive annual increase in volumes.
Despite the sales growth, retailers still said trade was poor for the time of year. Of the 69 retailers polled, 16% said activity was good for the time of year while 23% said it was disappointing. Despite the sales growth, retailers still said trade was poor for the time of year. Of the 69 retailers polled, 16% said activity was good for the time of year while 23% said it was disappointing. The balance of –7 points was the least negative since April, the employers' organisation said.