UK retailers enjoy strong February

Date: Thursday 25 Feb 2010

Investors welcomed some rare good news today as the CBI’s distributive trades survey surged to its highest in almost three years.

The balance of retailers reporting an increase in sales leapt to +23% year-on-year in February, the highest in 33 months and up from -8% in January. Economists had only expected a read of -1%.

“Following a recent series of worrying economic data and surveys including the news that business investment fell sharply in the fourth quarter of 2009, the February CBI distributive trades survey offers some very welcome respite,” said Howard Archer, chief UK economist at IHS Global Insight.

“The survey indicates that retail sales bounced back appreciably in February after being hit hard in January by the very bad weather.”

Near-term sales prospects also appear positive, with a balance of +16% expecting sales to be higher year-on-year in March.

Clothing and grocers were among the best performers, although most sectors did better in February, including durable household goods and furniture and carpets.

But Archer is still worried about limited upside for consumer spending - and hence overall economic growth – in 2010 on rising unemployment, low earnings growth, high debt and January's VAT hike.

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