High Street picks up in February

Sales outperform expectations of a flat first half of the month with strongest growth in over two years.
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The CBI has also reported that further growth is predicted in March. Its latest Distributive Trades Survey revealed that although price inflation has accelerated sharply, the fall in employment has slowed, and investment intentions have stabilised for the first time in over two years.

Asked how sales volumes in early February compared against the same period in 2009, 23 per cent said they were lower, while 46 per cent said they were up. The resulting balance of +23 per cent is a clear improvement on January and is the strongest year-on-year increase in sales since May 2007 (+31 per cent).

16 per cent of retailers also expect that, compared with last March, there will be further growth over the next month.

The volume of orders placed on suppliers also improved in line with sales volumes, with a balance of 12 per cent saying they were up year-on-year. A similar rate of growth is expected next month.

Eight per cent of firms said sales were poor for the time of year but the three month moving average of sales volumes, which smoothes out monthly peaks and troughs, grew for a fourth consecutive month (a balance of + nine per cent).

The fall in employment eased for a second consecutive quarter. A balance of 16 per cent of firms said they were cutting headcount, with a broadly similar fall expected in March (-13 per cent).

Retail prices grew strongly in February (a balance of 40 per cent), most likely reflecting the increase in VAT at the start of this year. Prices are expected to rise at a similar pace next month (+43 per cent).

Andy Clarke, chairman of the CBI Distributive Trades Panel, and COO of Asda, said: "Sales have been stronger this month than many retailers predicted they would be, but that’s not surprising as January was impacted by VAT changes and forward buys in December.

“Retailers don’t think February’s growth spurt will be matched in March, but the sector can take some reassurance that job losses are easing off and capital expenditure plans are stabilising.

"While retailers see some growth ahead, the road to recovery through 2010 is likely to be fragile. Worries about the economy and upcoming pay freezes are likely to ensure that shoppers remain cautious."

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