Retail figures add to economic gloom

The CBI's monthly distributive trades survey found retail sales to have risen at a much weaker rate than retailers had hoped in July.

The survey's net balance - the number of retailers seeing a higher volume of sales compared to a year ago minus those seeing a decline - fell from a one-and-a-half year high of +42% in June to +11%, its lowest since April.

This analysis backs up the recent PwC retail insolvency figures which showed the number of retailers going out of business in the second quarter jumping up by more than 10%.

Chris Williamson, chief economist at Markit, commented on the CBI survey and Bank of England lending data: "UK retailers became gloomier in July, corresponding with data showing ongoing weak demand for consumer credit and a further downturn in the housing market.

“Retailers had previously had high hopes for July .When asked in June about expected sales in the coming month, optimism had risen to the highest in 18 months. Once again it seems the weather was to blame, with rain reportedly deterring people from the high street. Retailers are somewhat more sanguine about August, with the indicator for expected sales dropping steeply from 32% to 3%, its lowest since April. Firms are perhaps adjusting to the reality that sales will remain depressed due to the combination of low demand for seasonal ranges due to the poor summer weather, plus the ongoing financial headwinds faced by households.

"These headwinds were highlighted by data from the Bank of England, which showed consumer credit to have risen again in June but the pace of growth to have remained very weak by historical standards.