RETAILERS enjoyed a better October than forecast, according to figures released yesterday by the CBI, hinting that the economic recovery may be gathering pace.
Analysts said that falling inflation and improving employment figures have meant that consumers are beginning to spend a little more in the shops, giving retailers some encouragement in the all-important run up to Christmas.
Nearly half of stores reported rising sales volumes during October, following on from an increase in September.
Retailers said that they also expect the improvement in sales to continue into November.
Howard Archer, chief UK economist at forecasting firm IHS Global InSight, said: “The robust CBI distributive trades’ survey for October indicates that consumer spending started off the fourth quarter well.
“Given the key role of consumer spending, the survey provides a significant boost to hopes the economy can keep growing in the fourth quarter following the better-than-expected third-quarter gross domestic product [GDP] rebound.”
Official data released last week revealed that GDP had risen by 1 per cent in the three months to 30 September, thrusting the UK out of recession thanks to a boost from the Olympic and Paralympic games.
Inflation fell to a 34-month low of 2.2 per cent in September and figures released yesterday showed that consumer borrowing rose last month at the sharpest rate since early 2008.
Anna Leach, head of economic analysis at the CBI, said: “It is great news that last month’s sales growth has continued into October, at a much faster pace than expected, and that this momentum is expected to continue next month too.
“Falling inflation has somewhat eased pressures on family budgets, so that households are a little more willing to spend.
“But there’s still a risk that ongoing uncertainty over the global economic outlook could dent consumer confidence while the scope for inflation to fall further is limited.”
CMC Markets senior analyst Michael Hewson said that the better-than-expected survey results gave sterling a boost on the foreign exchange markets.
The CBI survey also showed that sales volumes in the motor trade grew for the first time since March, beating expectations for a further fall.
But car showrooms warned that they expect sales volumes to fall again next month.
Rival car sales groups Lookers and Pendragon each reported rising used and new car sales yesterday after they benefited from the launch of the 62-plate last month. Used car sales rose by 12 per cent at Manchester-based Lookers – which owns the Lomond and Taggart chains north of the Border – while Stratstone-owner Pendragon posted a more modest 2.8 per cent rise.
