LONDON (Reuters) - Retail sales rose at their fastest pace in two years in November and retailers expect a further rise next month, according to a survey on Thursday that will boost hopes of a strong Christmas shopping period.
However, prospects for next year are less certain with the economy still weak and value-added tax set to rise on January 1, the Confederation of British Industry said.
The CBI's monthly distributive trades survey reported sales balance rose to +13 in November from +8 in October. That was in line with the consensus forecast from economists and the highest reading since November 2007.
The improvement was expected to continue, with retailers expecting a balance of +19 in December, the CBI said.
Shops reported the first monthly rise in the orders they placed with suppliers since January 2008, with this component of the index rising to its highest since November 2007.
"November's CBI distributive trades survey suggests that the Christmas run-up in the high street has got off to a reasonable start," said Jonathan Loynes at Capital Economics. The monthly survey was boosted by sales of footwear, durable goods, furniture and carpets, while clothing and DIY sales were weaker. The quarterly survey's business situation balance rose to +13 -- the highest since May 2004 -- from -2 in August.
Updates from retailers added to the cautiously upbeat mood. Bellwether department store chain John Lewis
And DSG International
However, much of the recent improvement has been driven by temporary factors such as record-low interest rates and a cut in value-added tax. News that bookseller Borders was considering calling in administrators highlighted that vulnerabilities remained.
"Despite the more upbeat mood, and pre-Christmas sales growth, consumers are still worried about job losses and a weak economy. In 2010 the high street will find that recovery is fragile and slow," Andy Clarke, chief operating office of Asda
"Christmas aside, this December will also be busy because shoppers are trying to beat the VAT rise in January and many retailers are starting to target that behaviour."
(Reporting by Fiona Shaikh, writing by Christina Fincher; Editing by Toby Chopra)
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Last updated: 26 November 2009, 12:03
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