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U.K. Retail-Sales Index Increases to Eight-Month High, CBI Says

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Feb. 28 (Bloomberg) -- An index of U.K. retail sales rose in February to the highest in eight months as a jump in food sales masked underlying weakness in the sector, the Confederation of British Industry said.

The gauge increased to minus 2 from minus 22 the previous month, the London-based business lobby said in a report today. While a measure of expected sales for next month was at 2, indicating retailers expect sales to improve in March, stores remain cautious on the outlook.

Consumer spending rose 0.5 percent in the fourth quarter, the first increase for 1 1/2 years. Still, Bank of England Governor Mervyn King said on Feb. 15 that Britain’s economy is facing “substantial headwinds” as higher unemployment, tighter credit and the deepest fiscal squeeze since World War II restrain growth.

“It’s good to see more positive signs on the high street, but consumers are clearly continuing to focus spending on day-to-day needs rather than big-ticket or luxury items,” said Judith McKenna, chief operating officer of Wal-Mart Stores Inc.’s Asda unit and chair of the CBI’s distributive trades panel. “With disposable incomes under constant pressure, retailers remain concerned about the general business outlook for the rest of 2012.”

A quarterly gauge of retailers’ investment intentions for the year ahead fell to minus 43 in February from minus 4 in November, today’s report showed. A measure of the outlook for business over the coming three months fell to minus 12 from minus 8.

Within the monthly survey, the sales index for grocers rose to 55 this month from 6 in January, while the measure for clothing stores plunged to minus 41, the lowest since March 2009, from 8, the CBI said.

A measure of three-month sales volumes rose to minus 5 this month from minus 11 in January. An index of the volume of sales for the time of year fell to minus 31 from minus 20. A gauge of orders placed on suppliers was at minus 4 from minus 14. The survey of 135 companies was conducted between Jan. 26 and Feb. 15.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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