LONDON (Reuters) - Retail sales unexpectedly shot up in September at their fastest pace in six years, a survey showed on Tuesday, as consumers splashed out on new clothes, shoes and furniture.
The CBI’s monthly distributive trades survey’s reported sales balance jumped to +49 in September from +35 in August, the highest reading since May 2004. Analysts had forecast +25.
Sterling extended gains versus the dollar and gilt futures extended losses after a reading that flies in the face of widespread predictions that the economy is slowing after expanding 1.2 percent in the second quarter.
Retailers are anticipating strong sales next month as well, with the expected sales balance for October coming in at +47. Orders placed with suppliers grew at their fastest pace since April 2002.
“Retailers expect sales growth to continue next month and, as we get closer to January, sales will be helped by households seeking to beat the VAT rise,” said CBI chief economic advisor Ian McCafferty.
“However, weak prospects for take-home pay mean that consumer spending is likely to be fairly restrained in 2011.”
The CBI attributed the strong sales rises to shopping over the August bank holiday weekend, as the survey period ran from August 26 to September 15.
New season collections of clothing, footwear and leather goods also boosted sales, and furniture and carpets sold well too, the trade body said.
But British retailer JJB Sports JJB.L said earlier on Tuesday that trading had got tougher as shoppers brace for austerity measures.
Reporting by Fiona Shaikh; Editing by John Stonestreet