RETAILERS are gearing up for a promising Christmas, after the CBI yesterday revealed that sales have grown at their fastest pace for two years.
Confidence among retailers is at its highest level since July 2007, the CBI's latest distributive trades survey showed, with sales volumes expected to climb even higher next month.
The business group suggested that optimism has returned to such an
extent that retailers are preparing to place their highest volume of orders with suppliers since November 2007.
The positive forecast added to growing signals that the UK is heading for a relatively prosperous Christmas, despite still being in recession.
Recent encouraging results from Sir Philip Green's Arcadia Group, Debenhams and John Lewis have prompted hopes that the tills will be ringing in the run-up to the festive season. Andy Clarke, chief operating officer of Asda, who chairs the CBI panel which produces the report, said: "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.
"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."
Howard Archer, chief European and UK economist at IHS Global Insight, said the survey also signalled an improvement in the wider economy.
Archer said: "Given that consumer spending accounts for 65 per cent of GDP, the CBI's survey also boosts hopes that the economy will finally return to growth in the fourth quarter, although it is spending on consumer services, rather than retail sales, that has been the main problem on the consumer side."
However, a spokesman for the Scottish Retail Consortium cautioned against over-optimism, saying this year's figures compare with what turned out to be the worst Christmas in 15 years in 2008.
Richard Dodd, of the SRC, said: "There are reasons to be positive, and it's clear that things are much better than they were 12 months ago… but we shouldn't get carried away, as there are some big questions, particularly around what will happen next year."
Dodd said it was not yet clear how consumer spending would be affected by unemployment, which is forecast to continue rising well after the official end of the recession.
He also said there were major concerns about the impact of spending cuts next year.
The CBI survey showed that the balance of retailers reporting a rise in year-on-year sales rose to 8 per cent in October, the highest reading since December 2007 and up from 3 per cent in September.
In November, retailers expect a balance of 19 per cent – their most confident forecast since the start of the credit crunch in July 2007.
The survey helped to calm nerves after the Office for National Statistics last week reported that high street sales remained flat in September, the second consecutive month of zero growth.
