Jul 28, 2009
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Decline in UK retail sales eases in July

Jul 28, 2009

LONDON, July 28 (Reuters) - The decline in British retail sales eased in July but by less than economists had expected, a survey by the Confederation of British Industry showed on Tuesday 28 July.

Just under half of retailers in the CBI's distributive trades survey reported a decline in sales compared to last July, while slightly under a third reported a rise.

This gave a balance of -15, up from -17 the previous month but less than the rise to -12 that economists had forecast.

"It appears that consumers are modestly more prepared to spend compared to earlier this year, but are still pretty reluctant to splash out," said Howard Archer, chief UK economist at IHS Global Insight.

Grocers and shoe shops reported the most widespread rise in sales, while hardware and furniture stores, as well as booksellers and pharmacists, reported hefty declines -- albeit less than earlier in the year.

Analysts have widely blamed the drop in furniture and durable goods sales on fewer people moving home because of falling house prices -- Land Registry data on Tuesday 28 July showed a 14.0 percent annual drop.

The year-on-year fall in retail sales the CBI has reported for every month this year apart from April, when there was a blip caused by a late Easter, has only partly matched official retail data, which showed annual rises in January and June.

"While official retail sales have been seen as being strong recently it is worth noting that the average percentage year-on-year rate of growth here has been less than 1 percent during the first 6 months of the year," said George Buckley, UK economist at Deutsche Bank.

Retailers' sales expectations for the coming month, which have generally been gloomier than actual sales this year, pointed to a sales balance of -23 next month, compared to last month's forecast of a balance of -21 for July.

"Many retailers are having a difficult summer and no pick-up is expected for August. But the overall sales falls are not as heavy as we saw at the start of the year, and some retail sectors are reporting growth," said Andy Clarke, who chairs the survey panel and is chief operating officer of Asda (WMT.N).

The CBI added that rising unemployment was likely to constrain growth in retail sales going forward.

Motor traders' sales volumes also fell sharply in the year to July, with a balance of -76.

This represented a sharp worsening from -1 in June, when the the Society of Motor Manufacturers and Traders reported a 15.7 percent annual decline in sales, the smallest so far this year, after a boost in sales from a government scrappage incentive.

(By David Milliken. Editing by Victoria Main and Andy Bruce)

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