Retail sales fall

This month's decline in sales was in line with retailers' expectations and, other than in April, was the least negative result in nearly a year.

At the same time, retailers' sentiment about general business prospects was the least negative for over a year.

In the latest CBI Distributive Trades Survey, 31% of retailers said year-on-year sales volumes were up in the first half of May, while 48% said they were down.

The resulting balance of -17% was close to retailers' expectations (-15%) and, other than last month's broadly flat figure of +3%, was the least negative figure since June 2008 (-9%). A similar decline in sales is expected in June (-20%).

Sales for the time of year were reported to be poor by a net 36% of retailers, though they have slightly less negative expectations for June (-20%). The three-month moving average of sales volumes, which smooths out monthly peaks and troughs, remained weak (a balance of -19%) but was the least negative figure for nearly a year (-16% in June 2008).

When asked about the general business situation facing retail, the balance of firms expecting it to deteriorate (-8%) was the least negative since November 2007 (a balance of -1%).

Ian McCafferty, the CBI's chief economic adviser, said: "Retailers are less pessimistic about their general business situation, and the decline in demand now appears to be slowing compared with the turn of the year. However, with unemployment still rising, conditions will remain tough."

Among the retail sectors, two reported positive sales growth in May - grocers and footwear & leather - although sales grew for both at a slower pace than in April. The hardware, china & DIY sector saw flat sales growth in May, while sales of big ticket household items, such as durable goods and furniture & carpets, continued to fall.