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Retail sales weaker than expected in July

Gloomy weather and weak consumer confidence dent retail sales growth after diamond jubilee surge says CBI.

Retailers' hopes of a bumper summer are being dampened by poor weather and weak consumer confidence, Britain's leading employers' organisation has said.

The Confederation of Business Industry (CBI) said July sales had been far weaker than expected and detected little sign of a boost in August from the Olympics.

Of the retailers questioned in the monthly distributive trades survey, 44% said business was up on July 2011; 33% said sales volumes were down. The balance of +11 percentage points was well down on the +42 points expected when retailers were polled a month ago.

Judith McKenna, chair of the CBI distributive trades panel and Asda chief operating officer, said: "Retailers reported an annual rise in sales and orders for the third month in a row, but the increase was far slower than firms had anticipated.

"The unprecedented poor weather for the time of year did not help, but retailers also expect conditions to remain tough during August. With consumer confidence weak and wage growth remaining sluggish, the longer-term outlook for retailers remains challenging."

Retailers had high hopes for July, with optimism at its highest level for 18 months. But the poor level of trade has made them gloomier about their immediate prospects. A balance of just +3 percentage points said they expected business to be better in August 2012 than it was this time last year.

Chris Williamson, an analyst at Markit, said: "Firms are perhaps adjusting to the reality that sales will remain depressed due to the combination of low demand for seasonal ranges due to the poor summer weather plus the ongoing financial headwinds faced by households."

Samuel Tombs, UK analyst at Capital Economics, said: "July's CBI distributive trades survey indicated that retail sales growth slowed more than retailers expected. Although real incomes may be rising modestly soon, we doubt that this will prevent sales growth from slowing further later this year."

Source: Larry Elliott and Lucy Roberts, The Guardian

30 July 2012
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