UK retailers predict worst February on record – CBI

British retailers gave their gloomiest forecast on record on Tuesday when the Confederation of British Industry published its monthly survey, even though January sales were somewhat better than expected.

The CBI's retail sales balance rose to -47 in January from the record low of -55 set in December, better than the -53 expected by analysts and the -49 forecast by retailers themselves in last month's report.

But retailers' outlook for the month to come was the gloomiest since the CBI survey began in 1983, falling to -52.

"Most of the retail sector continues to struggle as the recession bites more deeply, and February will be tough," said Ian McCafferty, chief economic advisor to the CBI.

"It is possible that pre-Christmas discounting by some retailers numbed many shoppers to the allure of the New Year sales."

The three-month moving average for the sales balance, which irons out fluctuations in the data, hit a record low of -49 in January, falling from December's -43.

"The sector is under enormous pressure," said Matthew Sharratt, an economist at Bank of America.

"We've started to see a very sharp surge in unemployment, so if anything, spending is going to fall further as households reduce borrowing."

Surveys by the CBI and the British Retail Consortium have persistently painted a bleaker picture than official data from the Office for National Statistics, which last week reported that retail sales for the three months to December were 2.4 percent higher than a year earlier.

Sharratt said the reasons for this were still unclear, though possibly linked to the ONS's broader coverage of small shops and internet retailers, as opposed to the CBI's focus on larger stores.

Nonetheless, he said that official retail sales data looked unusually rosy when compared to past downturns, and expected them to increasingly reflect the gloomier industry reports.

The CBI survey was conducted between Jan. 5 and Jan. 16, with answers from 165 retailers.