Christmas comes early for UK retailers

January 3, 2002 Posted: 1253 GMT

LONDON, (Reuters) - British retailers enjoyed the best start to the Christmas shopping period for 14 years as confident consumers continued to drive the economy forward, the Confederation of British Industry said on Thursday.

The CBI's latest distributive trades survey found the balance of retailers reporting rising sales in the run-up to Christmas over those reporting a fall rose to +48 percent last month from +29 in November.

It was the best score recorded by the CBI for December since 1987.

Stores selling durable household goods led the way, recording the strongest annual growth in sales since June 1997.

The survey, based on 276 retail companies, was carried out between December 4 and 19 but the CBI said the trend from early December showed no sign of cooling over the rest of the month.

"Early indications are that the robust start to the Christmas period continued throughout December," said Alistair Eperon, chairman of the CBI's Distributive Trades Panel.

"If the retail sector can maintain this position it will provide underlying strength to the UK economy as we go into the New Year," he added.

Nevertheless, the CBI survey showed retailers were slightly less confident about sales going forward. The sales expectations balance for the next three months slipped back to +19 percent for January, from +30 in December.

Although the pace of sales is expected to cool this month industry figures on Thursday from the retail organisation FootFall showed consumers were turning out in force for the traditional January sales.

The sales began on Boxing Day and Footfall, which tracks the number of shoppers to Britain's main shopping centres, said December 27 turned out to be the busiest shopping day of the year with visitor numbers up 10.24 percent on the same date in 2000. The weekend of 29/30 December was also up five percent on the equivalent period in 2000, Footfall said.

Economists said the CBI survey was further good news for retailers and for the British economy, which is enjoying the best short-term growth prospects in the Group of Seven leading industrialised nations.

While economists expect consumers to rein in their spending somewhat in coming months as mounting job losses take their toll on confidence, there are few signs that spending is likely to fall sharply.

"We still believe the retail sales will slow from its current buoyant levels, but there is little reason why it should collapse in the near term as confidence remains high, interest rates stay low and unemployment rises but from very low levels," said HSBC's John Butler.

The strength of consumer demand in December was reflected in orders placed by retailers with suppliers which rose at their fastest pace since October 1996 to record a balance of +42 percent compared with +13 in November.

As well as household durables, substantial growth was recorded by hardware, china and do-it-yourself stores. Grocers, specialist food and clothes shops also reported significant increases in sales.

The lowest sales growth increases were reported by booksellers and stationers, furniture and carpet stores and those selling footwear and leather goods.

Motor traders' sales volumes, meanwhile, grew at their fastest pace in September when they were boosted by the introduction of a new car registration number.