By Claire West

The volume of sales on the high street during the last month were lower than a year ago, surprising retailers, according to the latest CBI Quarterly Distributive Trades Survey. Orders placed by retailers with suppliers also fell, as did employment.

Although 30% of retailers said that the volume of sales rose during the first two weeks in May, 48% said they fell, giving a balance of -18%. This was a much weaker result than expected by respondents (+17%), and was the lowest balance since March 2009 (-44%).

The major sub-sectors which saw the sharpest year-on-year fall in sales were: chemists, durable household goods and hardware, china and DIY; while clothing sales were also down after three months of continuous growth.

The balance for the underlying trend, the three-month moving average of sales volumes, was +3%, indicating little movement in sales and reflecting the positive figures in the previous two months.

Retailers are also negative about next month, with a balance of -15% indicating that another fall in volume of sales is expected.

Employment in the retail sector, which features in the longer, quarterly CBI survey, continued to fall in May compared with a year ago (balance of -20%).

The survey also showed that price inflation continued to rise. 54% of retailers said average selling prices rose, and 5% said they fell giving a balance of +49%.

In a sign that conditions in the retail sector remain challenging, a net 5% of firms expect the overall business situation to deteriorate over the next three months.

The survey was conducted between 27th April and 12th May, and also covers wholesaling, where sales volumes continued to grow. 41% of wholesalers said that sales rose, while 22% said they fell, giving a rounded balance of +20 per cent, which was not quite as strong as expected (+42%). Wholesalers predict volumes next month will be broadly unchanged on last year (a balance of +3%).

However, employment in wholesaling fell sharply, with a balance of -53% reporting a year-on-year decline in May.

Ian McCafferty, CBI Chief Economic Adviser, said:

“These retail sales figures for the early part of May are clearly disappointing, with many sectors failing to achieve higher sales than a year ago.

”Unseasonal poor weather at the start of the month is likely to have dented clothing sales, while some signs of slowing momentum in the housing market may help to account for the renewed weakness in sales of big-ticket items and other household goods.

“Retail conditions look to remain fragile however, as another year-on-year fall in sales is expected in June.

“It appears that shoppers are feeling the pinch again and are being cautious with their purchases, given the squeeze to real incomes from higher prices and only a modest rise in average pay.”

Among motor traders business was better than expected in May, with the volume of sales rising (a balance of +23%), compared with an expected fall (-44%). There were particularly strong sales of parts and accessories with all respondents reporting a rise. In contrast, sales of vehicles saw only marginal growth (a balance of +5%).