A surprise and unwelcome fall in November's retail figures on the British high street has sounded a warning about the extent of the recession and hopes for recovery.
The figures released Thursday by the Office for National Statistics showed a 0.3 percent month-on-month fall in retail sales in November.
Hopes that more positive employment figures released on Wednesday, which saw a decline in the rate of increase in the jobless total and both a
fall in benefit claimant numbers and a rise in the number of jobs in the economy, would be echoed in these figures were dashed by the gloomy figures.
Retail sales figures in October had been buoyant -- rising 0.6 percent month on month, and economists had expected November to be similar.
Commenting on the retail sales figures David Kern, chief economist at the British Chambers of Commerce, said "The unexpected fall in November
retail sales highlights the obstacles facing Britain's economic recovery.
"Although it is likely that the economy will register small growth in the fourth quarter of 2009, any recovery will be difficult to sustain if access to finance is not improved, and the regulatory burden on business is not eased.
"It's too early for the Bank of England to consider withdrawing the stimulus provided by the quantitative easing program, but the emphasis must be on measures aimed at boosting bank lending to small and medium-sized companies."
Sales at shops fell by 1.8 percent in November, with sales at non-specialized stores such as department stores falling by 4.4 percent.
Sales at food stores were the strongest in November, with a rise of 0.4 percent.
Despite a strong annual sales rise in the clothing sales sector, up 7.1 percent year on year, month-on-month figures took a hit of 2 percent, after rising 1.5 percent in October.
The overall figures do mark an improvement year-on-year, with sales up 3.1 percent. However, this was a slowdown from October's year-on-year figure which saw a 3.7 percent increase.
The figures had an immediate effect, knocking sterling down against the dollar. Wednesday's close of 1.637 U.S. dollars to the pound was down two cents by midday, with sterling at 1.61 U.S. dollars to the pound.
The figures come at the same time as the Confederation of British Industry (CBI) issued its latest Distributive Trades Survey, which shows that in the year to Dec. 9, retailers maintained year-on-year sales growth at November's levels, led by a strong performance from grocers and durable household goods. Meanwhile, motor traders reported their fastest sales growth since April 2002.
Asked about sales over the last year, 45 percent of respondents said they had risen, while 32 percent reported a fall. The resulting balance of 13 percent is slightly lower than had been expected (19 percent), but matched November's figure. Because the survey closed on Dec. 9 retailers could still see a further sales boost for the month as a whole.
Andy Clarke, chairman of the CBI Distributive Trades Panel, and chief operating officer of leading supermarket chain Asda, said " With a week left to go until Christmas, retailers may yet benefit from a flurry of last-minute sales and from shoppers bringing forward spending to beat the VAT rise (set to go up from 15 percent to 17.5 percent on Jan. 1).
"Grocers have continued to enjoy strong growth after some fierce price-cutting, while motor traders appear to be reaping the benefits of the scrappage scheme with sales growing at their fastest rate in seven years.
Sectors relating to the housing sector are also seeing improvements.
"Although individual retailers may post healthy-looking Christmas numbers compared to the same time last year when we were in the grip of the recession, conditions across the whole of the sector are likely to remain challenging in 2010. The recent growth in retail sector sales is expected to fizzle out in the New Year."