But employment falls
Retail sales growth in May was better than expected, but job losses in the sector hit at a record rate.

The CBI Quarterly Distributive Trades Survey found that 36 per cent of retailers said sales volumes were up on last year, compared with 27 per cent that reported they had decreased. Although better than expected, sales were still regarded as low for this time of year. The survey also found that more retailers had been forced to cut prices.

Retail employment fell at its fastest rate since the CBI survey began. Thirty-nine per cent of retailers reported a fall, while only 10 per cent said employee numbers had risen.

The World Cup and a pick-up in the housing market contributed to sales increases in the durable household goods sector. Sales increased for the first month since April 2002, with a balance of 65 per cent of retailers saying sales of these items were up. However, hardware and DIY retailers reported a drop in sales, as did carpet and furniture stores.

Clothing sales rose, but growth was at a slower rate than April. Food sales grew as well, but chemists' sales returned to decline after two months of consecutive growth.

Asda executive director and chairman of the CBI Distributive Trades Survey, John Longworth said: 'Everyone has been looking for a pick-up in consumer demand, so it is encouraging to see sales increase for some sectors with underlying demand improving overall. But growth in sales volumes today is still a world away from the rate we were seeing just a few years ago and retailers are still facing fierce price competition and tighter profit margins.'

Seymour pierce analyst Richard Ratner said: 'There is nothing here to make us change our view that it is very sticky out there, and that the downturn is not just cyclical, but structural.'