Businesses warn retail recovery isn't sustainable as sales growth hits nine month high

UK retail sales grew at the fastest annual pace in nine months in the year to August, while employment in the sector grew by the most in 11 years, according to survey data from the Confederation of British Industry.

Nearly half (49 per cent) of retailers responding to the Distributive Trades Survey for August said sales volumes had increased from the year before, while 22 per cent said they were down.

This resulted in a net +27 per cent reporting improving sales conditions – up from +17 per cent the month before and the highest since November 2012 (+33 per cent).

Particularly strong sub-sectors include clothing (+76 per cent), grocers (+24 per cent) and recreational goods (+74 per cent).

A net 26 per cent of retailers expect similarly strong sales growth next month, while a net 20 per cent expect the overall business situation to improve over the next three months (the strongest balace since August 2010).

Encouragingly, employment in the retail sector increased by a net 14 per cent in the year to August – the strongest balance since May 2002 (+16 per cent). Headcount is expected to increase again next month (+9 per cent).

Barry Williams, Asda's head of food merchandising and chair of the CBI Distributive Trades Survey Panel, said:

The feel-good factor from the heatwave, summer sales, royal baby fever and sporting victories has helped boost the high street, with clothing retailers and grocers benefiting in particular.

A rise in spending is welcome news, but the bottom line is that confidence will not bounce back fully until family finances improve further.

Retailers expect another similarly strong month of sales growth in September, but 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.