Growth in UK retail sales stalls

UK retail sales were unchanged in August compared with the previous month, casting doubt on the strength of the recovery in consumer spending.

Sales growth in July was also revised down, from 0.4% to 0.2%, the Office for National Statistics (ONS) said.

Food sales growth was more than offset by falls in clothing and footwear.

To add to the retail gloom, department store John Lewis announced a fall in profits and predicted tough trading conditions in the coming months.

Big falls

Retail sales rose by 1.3% in June, and analysts had been expecting a third straight month of growth to reinforce hopes that the UK was emerging from recession - as hinted by other data.

There were signs of growth in some sectors. August food sales rose by 0.7%, while non-store retailing - which includes internet, telephone and mail order shopping - and repair shops saw sales grow by 1.1%.

But this was not enough to offset bigger falls in other areas.

All non-food sectors, apart from household goods, suffered declines in sales. The worst hit were textile, clothing and footwear shops, where sales dipped 1.3%.

Department store John Lewis added to the downbeat retail outlook when it announced a 20% fall in profits for the first half of the year, and said it expected the coming months to be tough.

"We expect trading conditions for the remainder of 2009 , and into 2010, to continue to be difficult," said chairman Charlie Mayfield.

He forecast a "slow, drawn-out economic recovery."

Reflecting the growth the overall growth in food sales, however, the group did see stronger performance in its supermarket chain Waitrose.

'Cautious spending'

Earlier this month, figures from the British Retail Consortium (BRC) suggested that like-for-like retail sales - which do not include new stores - fell in August, by 0.1%.

"The official data confirms our own findings that the strong retail sales in June and July were not sustained," said BRC director general Stephen Robertson.

Analysts had been expecting sales to rise

"With unemployment rates at 14-year highs and predicted to increase into next year, most people are still very cautious about spending on expensive items - unless there are sufficient discounts."

Separately, a survey from business group, the CBI, found that orders for UK manufactured goods remained weak.

Of the 555 manufacturers surveyed, 8% said orders were above normal levels, while 56% said they were below normal.

Export orders were particularly low, despite the relative weakness of the pound, the CBI said.

news.bbc.co.uk