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U.K. Retail Sales Rise Sharply in November

y AINSLEY THOMSON And ART PATNAUDE

LONDON—U.K. retail-sales volumes rose for the fifth consecutive month in November, receiving a strong boost from Halloween and pre-Christmas sales, a survey by the Confederation of British Industry showed Thursday.

The monthly Distributive Trades Survey's retail sales balance rose to +43 in November from +36 in October. The balance is the difference between the percentage of retailers reporting higher sales and those reporting lower sales. Economists had expected a balance of +33.

The survey was carried out between Oct. 28 and Nov. 10, which meant the Halloween and school-holiday period were included. A total of 142 firms responded to the survey.

Grocers and clothing retailers saw the strongest sales growth, the CBI said. "High-street sales held up well in November, and retailers are hopeful that the run-up to Christmas will be just as strong," Ian McCafferty, CBI chief economic adviser, said.

The latest official figures from the Office for National statistics, released last Thursday, showed retail-sales volumes were 0.5% higher in October than September. The monthly rise in October, which came after a surprise fall in September, was attributed to consumers looking to buy big-ticket items ahead of the sales-tax increase in January, and to pre-Christmas purchases.

Looking ahead, the CBI survey showed a balance of +45 retailers expected higher sales in December. Last month, a balance of +43 were expecting higher sales in November.

Howard Archer, chief U.K. and European Economist at IHS Global Insight, said Thursday's figures suggest the Christmas period is shaping up well for retailers.

"Retailers will be hoping that consumers decide to splash out and have a good Christmas despite significant economic worries and uncertainties," he said. "It is also likely that retail sales will benefit to a limited extent in the final weeks of this year from consumers looking to make purchases of more expensive items ahead of the January value-added tax increase from 17.5% to 20%."

However, Samuel Tombs, U.K. economist at Capital Economics, said any boost to sales from consumers trying to beat the VAT increase would be temporary. "Nonetheless, a reasonable end to the year could still be in prospect for retailers over the crucial Christmas period," Mr. Tombs added. "So, even if other parts of the economy are struggling, consumer spending could prevent the recovery from slowing too sharply in the fourth quarter."

The CBI cautioned retail-sales growth could slow in the new year as [consumers] rein in spending after Christmas. "Confidence remains fragile," McCafferty said. "[The] VAT is rising and a combination of weak wage growth and high inflation is eating into household incomes."



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Last Updated
6th of January, 2011

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