Page last updated at 11:52 GMT, Tuesday, 9 December 2008

Retail sales 'fall still further'

Shoppers on London's Oxford Street at the weekend
Retailers have had little to cheer

Total UK retail sales have fallen in consecutive months for the first time in at least 13 years, a closely-watched survey has said.

Sales in November were down 0.4% from a year earlier, said the latest British Retail Consortium-KPMG retail survey.

Following a 0.1% decline in October, it was the first drop in overall sales for two months in a row since the survey was first released in January 1995.

Separately, figures on Tuesday showed manufacturing fell sharply in October.

And property sales have slowed again, according to a survey by the Royal Institution of Chartered Surveyors (Rics).

The number of sales per estate agency fell during the three months to November to 10.6, Rics said, down from the 10.9 sales per agency reported a month ago.

New shops

The British Retail Consortium (BRC) report said retailers were now facing a "nerve-wracking Christmas".

However, BBC correspondent Nils Blythe said the BRC figures "give only modest support to the view that a savage downturn on the High Street is already under way".

On a like-for-like basis - which pulls out the impact of new store openings and closures - the survey found that sales in November were down 2.6%.

There is little doubt that Christmas will arrive late for many retailers, leaving them with a very nerve-wracking couple of weeks to come
Helen Dickinson, KPMG

This was the sixth month in a row to see like-for-like sales decline, but our correspondent said the fall in sales "partly reflects the large number of new shops" that were opened this year.

Total sales were up 2% in November when the figures are measured on a 12-month moving average.

'Food sales up'

The BRC said food and drink was the only sector to see sales rise last month, lifted by continuing heavy discounting by the supermarkets.

It added that it hoped the cut in VAT from 17.5% to 15% would now help to lift sales.

"There is little doubt that Christmas will arrive late for many retailers, leaving them with a very nerve-wracking couple of weeks to come," said Helen Dickinson, head of retail at KPMG.

The Bank of England has more work to do with a growing likelihood that UK rates will eventually get down to zero
James Knightley, ING

For retailers, Christmas is a key trading period and for some firms it can represent more than three-quarters of annual revenues.

As High Street firms such as Woolworths enter administration, there are fears that other firms could see a similar fate.

Stephen Robertson, the BRC's director-general said: "The numbers speak for themselves - these are clearly tough times."

But he added that it was hoped the "extraordinary" number of discounts and promotions would encourage some shoppers to spend more.

Wider slowdown

Meanwhile, separate data on Tuesday showed a slowdown in manufacturing output for October.

Output for the month declined 4.9% compared with the same period a year before, and was down 1.4% from the month before, the Office for National Statistics said.

And industrial production shrank 5.2% in October compared with a year ago - the largest such drop since April 1991.

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I do not want my town shops to disappear, I love my town centre
Elizabeth Philips, Halifax

Hetal Mehta, senior economic advisor to the Ernst & Young ITEM Club, said October's industrial output figures were "much weaker than expected", adding that manufacturing had been hit by a dramatic slowdown in the transport sector.

Analysts said such figures indicate that the economy will contract further in the last quarter of this year and during the beginning of 2010.

The contraction in industrial production in October "heightens concern about the potential length and depth of the recession and intensifies pressure on the Bank of England to deliver yet another hefty interest rate cut in January," said Global Insight economist Howard Archer.

The Bank of England recently reduced the Bank rate to its lowest level in more than half a century - to 2% - in an attempt to boost growth as fears intensify over a recession.

James Knightley, an economist at ING, said: "We look for GDP to contract close to 1% in the fourth quarter of 2008 with a similar outcome for the first quarter of 2009."

"Consequently, the Bank of England has more work to do with a growing likelihood that UK rates will eventually get down to zero."

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FROM OTHER NEWS SITES
Dewsbury Reporter Sales dip spells High Street gloom - 2 hrs ago
Boston Globe UK retail sales fall for 2nd month in November - 3 hrs ago
Sydney Morning HeraldUK retail sales fall for second month - 5 hrs ago
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