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Retail sales remain weak in June

Retail sales fell for the second month running in the year to June, following April’s brief respite, the CBI said today (Wednesday).

CITY & CORPORATE

Retail sales remain weak in June

The decline, broadly in line with retailers' expectations, was no worse than in May however, and less severe than falls recorded between July 2008 and March 2009. In the CBI's latest Distributive Trades Survey, while 31% of retailers said year-on-year sales volumes rose in the first two weeks of June, 48% said they were down, giving a balance of -17%.

Retailers expect sales to fall slightly faster in July, but this balance of -21% is similar to expect

ations for June (-20%). Sales for the time of year were said to be poor by a net 15% of retailers, though this was less negative than in May (a balance of -36%). They are expected to be similarly below par in July (-13%).

The three-month moving average, which smooths out monthly peaks and troughs, remained negative (a balance of -10%), though was the least negative for over a year (-9% in April 2008).

For the second month running, the balance of retailers saying volumes of stocks were more than adequate to meet demand was below the long-term average, with a balance of +6% the lowest since June 2007 (+6%). Reflecting this, orders placed by retailers with their suppliers were cut at the slowest rate since March 2008 (a balance of -10%). Retailers expect they will fall slightly faster in July (-14%).

Looking at the retail market sectors, grocers continued to see strong growth on a year ago. The only other sector to see growth was furniture & carpets, which recorded its best figure for 18 months. Elsewhere, there were particularly marked declines in durable household goods, hardware, china & DIY and clothing. After two months of strong growth, sales in footwear & leather shops were merely flat.

Andy Clarke, Chairman of the CBI Distributive Trades Panel, and Chief Operating Officer of Asda, said: "June's weak sales figures show that business on the high street isn't getting any easier. The one consolation for retailers is, it isn't getting any worse, and the dark days of the winter are behind us.

"It is too early to foresee a sustained pick-up in retailers' fortunes over the coming months, and the savviest retailers will continue working hard to offer consumers the best possible value for money."

Sales volumes in the wholesale sector fell in the year to June at a faster pace than in the previous two months, though the balance of -36% was less negative than expected (-48%). A similar rate of decline is expected in July and, if it occurs, would be the thirteenth consecutive month of falling sales. Industrial merchants and builders' merchants wholesalers were the hardest hit, but durable household goods, and clothing, textiles & footwear wholesalers also saw sales decline. Agricultural machinery and food & drink wholesalers saw no change in sales on a year ago.

Motor traders recorded their best sales figures for over a year, perhaps reflecting the recent boost given to car sales by the onset of the Government's scrappage scheme, which the CBI had called for. Sales volumes were broadly flat in the year to June (a balance of -1%), and were the least negative since May 2008 (+30%).

Traders selling vehicles reported their least negative balance of sales since May last year (-7% versus +31%), while parts & accessories vendors saw their sales grow (+29%). Next month, overall sales in the motor trades sector are expected to dip marginally (-4%), though this is the least negative expectation for just over a year.

Ian McCafferty, the CBI's Chief Economic Adviser, said: "This survey shows the government's new car scrappage scheme may be making a difference, with motor traders seeing their least negative sales for over a year."

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