BRITISH retail sales volumes grew for a third straight month in April, albeit at a slightly slower pace than expected, and retailers are confident of an acceleration next month, a survey showed yesterday.
But a sustained recovery in consumer spending looks threatened by signs the housing market may be running out of steam and the prospect of a squeeze on government spending and higher taxes in the near future.
The reported sales balance in the CBI’s monthly distributive trades survey held steady at March’s level of +13 in April, slightly below economists’ forecast of a reading of +15 and retailers’ own expectation of a +14 reading.
Sterling came under pressure on the foreign exchanges as investors speculated on a weaker outlook for the UK economy.
However, retailers reckoned sales growth would pick up next month, with the expected sales balance for May rising to +17.
Analysts said the figures suggested a modest revival in consumer spending was underway, after a dip at the start of the year when the harshest winter in 30 years hit sales.
“We still have our concerns about spending in the second half of the year. But for now, consumers still seem to be playing their part in the wider economic recovery,” said Vicky Redwood of Capital Economics.
Indeed, the CBI balance gauging sales volumes in the three months to April rose to +16 from +9, the highest in almost three years.
And retailers are confident that underlying sales growth will remain strong, with an expected balance of +16 for May – also a near-three-year high.
The CBI said firm sales of footwear had given a boost to sales, and it attributed a modest pick-up in sales of furniture and carpets to the recovering housing market.
City A.M. Reporter