Heatwave retail boost unwound in June -Bank agents

By Matt Falloon

LONDON (Reuters) - The boost to consumer spending from May's heatwave came undone in June and housing market activity was weaker than during the early 1990s slump, a Bank of England regional survey indicated on Wednesday.

The Agents' summary of business conditions showed that while a majority of firms remained largely unaffected by the scourge of the credit crunch, there was less demand for staff and the construction and services sector weakened.

Official retail sales data, due on Thursday, are expected to show a turnaround last month following May's bumper performance when sales jumped at the fastest monthly rate since the series began in 1986.

That surge raised more than a few eyebrows because most economists -- and policymakers -- are expecting consumer spending to tail off as the economy slows and living costs rise.

"In contrast to the official data, few contacts had seen especially strong demand in May," the Bank said. "Warm snaps during parts of May had stimulated demand for summer clothing and food somewhat. But this had largely unwound in June."

"The Agents' score for spending on consumer services fell sharply in June, reaching its lowest level since the scores began in 1997. Reports of a slowdown were widespread."

However, agents also said many retailers had brought their summer sales forward in the furniture, clothing and electrical goods sectors -- a development that might give a boost to the sales volumes.

HOUSING DECLINE