British house prices fell at their slowest annual pace in 1-1/2 years in the three months to May, in a sign that the housing market may be near a trough, but consumers curbed spending in shops, surveys showed on Tuesday. The Royal Institution of Chartered Surveyors' monthly house price balance rose to -44.1 last month, its best reading since November 2007, and up from -58.7 in April.
But surveys by the British Retail Consortium and recruitment firm Manpower painted a less rosy picture of the economy, reinforcing most analysts' view that any recovery will be a long time coming.
The BRC said people spent less at the shops in May than a year ago and Manpower said firms remained their most reluctant in 17 years to take on new staff, although some sectors were willing to hire again.
The British Retail Consortium said like-for-like sales fell 0.8 percent in May compared with a year ago, down from April's Easter-related 4.6 percent rise, despite two long weekends and warm weather.
"The disappointing May BRC retail sales survey is a stark reminder that the consumer faces a lot of problems and that the economy is still in a lot of trouble despite the recent flurry of improved data and survey evidence," said Howard Archer, economist at IHS Global Insight.
Meanwhile, Manpower said its seasonally-adjusted net employment outlook balance held at -6 for Q3, the same as in Q2. The firm said some the pace of job shedding appeared to be easing and some sectors were even planning to hire again.
However, most analysts reckon unemployment will keep rising fast well into next year and could hit 3 million.
UNCERTAIN OUTLOOK
The RICS survey showed completed home sales rose to a nine-month high in May, echoing other recent indicators suggesting prices may be nearing a trough as people regain the confidence to buy a home and banks start lending again.
Surveys from mortgage lenders Halifax and Nationwide both showed house prices rose last month, while approvals for new home loans — a leading indicator of house prices — have edged up in recent months but still point to hefty falls ahead.
Still, surveyors were optimistic that the improving trend would continue, with confidence in the sales outlook reaching its highest since RICS started polling for this information in October 1998.
Retailers, however, have little cause for optimism, with consumers hanging on to their spare cash as Britain endures its worst downturn in decades and unemployment soars.
The BRC said clothing sales were lower than a year ago, and footwear sales fell at their sharpest rate in a year.
The weak housing market has also depressed sales of goods associated with moving house, such as furniture and electrical goods, although home improvement stores have benefited as people who are forced to stay put choose to redecorate instead.
"Extremely challenging market conditions — particularly for non-food sectors — continue," said Helen Dickinson, head of retail at consultancy KPMG, which sponsors the survey. "It remains to be seen when those who have cash to spare will feel confident to start spending again."
