UK retail sales slip back after post-lockdown surge

By David Milliken

LONDON (Reuters) - British retailers said sales fell back to more normal volumes earlier this month after a flurry of demand in April when a relaxation in lockdown rules allowed non-essential shops to reopen for the first time in months.

The Confederation of British Industry said its monthly balance for whether sales were above or below normal for the time of year dropped to -3 in May from +16 in April, indicating roughly normal volumes.

"Some retailers have suggested the increase in demand after the initial reopening of non-essential retail in early April was either short-lived or less strong than expected," CBI economist Ben Jones said.

Clothing and specialist food stores reported below-average sales, while demand remained strong at supermarkets, hardware and furniture shops.

Official retail sales data for April showed sales volumes jumped by a hefty 9.2% month-on-month and that volumes were 10% higher than pre-crisis levels.

The CBI survey covered the period April 28 to May 17 - before pubs and restaurants were allowed to serve customers indoors - and was based on responses from 45 retail chains.

Busier town centres in coming weeks might encourage more shoppers to return to the high street rather than continue to shop online, it added.

The Bank of England is keeping a close eye on consumer spending to gauge how rapid Britain's economic rebound from COVID is likely to be. It forecasts growth of 7.25% this year after output fell nearly 10% in 2020.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the CBI retail data was often weaker than other measures.

"The relative weakness of the CBI's survey might be because its sample often overweights high-street retailers and under-represents online-only retailers," he said.

Separate quarterly data from the CBI, also released on Tuesday, showed retailers planned to increase investment by the most since February 1994 over the next 12 months but staff numbers had fallen sharply over the past year.

(Reporting by David Milliken, editing by Andy Bruce)