High street sales pick up sharply

DIANE COYLE

Economics Correspondent

Retail sales picked up sharply last month, according to the latest survey from the Confederation of British Industry. In the first piece of good news after recent evidence the economy is slowing, retailers reported the biggest increase in sales since April.

Alastair Eperon, chairman of the CBI's distributive trades panel, said the results were encouraging. ``It is to be hoped the competitive trading environment is now encouraging previously cautious consumers to step up their spending in the critical pre-Christmas period.''

The CBI said the trend in sales over the past three months suggests they have resumed a modest upward path. The last official retail sales figuresshowed volumes dropped in September to their lowest in six months, but the CBI survey will raise hopes of a recovery in next week's figures for October.

However, the survey was not all rosy. Retailers were disappointed by sales in October, as they have been for nine out of the past 12 months. Sales remained below average for the time of year. Motor traders were particularly disappointed, reporting a sharp annual fall in sales. They had expected only a modest decline.

The survey showed that the positive balance of retailers reporting higher versus lower sales was 16 per cent. Booksellers and stationers, chemists, and stores selling household durables, furniture and carpets enjoyed the biggest increases in annual sales.

Thanks in part to price discounting since the end of the Net Book Agreement, booksellers saw their biggest rise in sales since September 1994, leaving the volume of business well above average. The balance of bookstores reporting higher sales compared to lower sales was 45 per cent, a turnaround from a balance of minus 50 per cent in August.

Chemists' sales volumes were also above average, having climbed for the third month in a row. Furniture and carpet sales rose for the first time since March, and sales of household durables increased at the fastest rate in just over a year.

There were falls in sales at shoe shops and clothes retailers. It was the third consecutive drop in clothing sales, although shoe and leather sales had seen a healthy increase in September.

Business was more buoyant at big retailers than small ones, according to the survey. Sales are expected to grow more quickly this month, although they are likely to remain below average for the time of year.