British retail sales volumes grew at their fastest pace in almost two years in October, a survey indicated on Tuesday, with retailers more upbeat about future prospects than at any time since July 2007.
The Confederation of British Industry's distributive trades survey reported sales balance rose to +8 in October from +3 in September. That beat the consensus forecast of a rise to +5 and was the highest reading since December 2007.
For November, retailers expect a balance of +19, their most optimistic outlook since July 2007, around the start of the credit crunch, and plan to place their highest volume of orders with suppliers since November 2007.
For a graphic showing the CBI distributive trades survey and UK retail sales growth, click here: http://r.reuters.com/gap26f
"The latest official data shows the economy is still in recession, however the retail sector seems to be finding its feet again after a challenging year," said Andy Clarke, chief operating officer of Asda <WMT.N> and chairman of the survey panel.
Clarke said the planned reversal of last year's cut in value-added sales tax should help to support sales in the next two months and indicated a recovery in the housing market was also having an impact.
"It is heartening to see signs of life in sectors related to the housing market, particularly those retailers selling white goods and furniture, who have had a torrid two years."
The CBI figures may provide some relief after official retail sales data which showed sales volumes stagnated in both August and September. However economists noted that October's survey may have been flattered by the weakness of spending a year ago.
"The CBI balance is probably more a reflection of previous weakness than the current strength of sales," said Vicky Redwood at Capital Economics.
She said the rise in October's retail sales balance left it consistent with strong annual growth in the official sales measure of over 4 percent — roughly twice the rate reported for September.
John Lewis [JLP.UL], the employee-owned group seen as a barometer of UK retailing, posted a fifth consecutive week of rising department store sales in the week to Oct 17, benefiting from weak comparative numbers and a store opening.
