High street sales better than expected: Retailers optimistic, but Gallup survey finds that consumers are nervous

HIGH street sales exceeded retailers' expectations for the third successive month in March, according to the latest distributive trades survey from the Confederation of British Industry.

But the improvement may be under threat. The latest Gallup survey for the EC shows consumers more nervous about their finances and less willing to buy big items than they were before the Budget.

The number of retailers reporting better sales in March than a year earlier was sharply higher than in the previous month and the most upbeat response since November 1991. Some 53 per cent said sales were up, with 28 per cent reporting a fall.

Spending in March last year was depressed by pre-election uncertainty, so the sharp improvement on the year may be consistent with the average City prediction that retail sales volume was broadly unchanged between March and the previous month. The official figures are due on Friday.

The rise in sales in the year to March encouraged a net 7 per cent of retailers to order more from their suppliers - the first annual increase for 10 months. But stocks of unsold goods were also higher than expected.

Retailers expect a further increase in sales growth in April, accompanied by a fall in stock levels and a small rise in orders from suppliers.

Nigel Whittaker, chairman of the CBI distributive trades panel, said the retail upturn appeared to be gathering pace, but he also sounded a note of caution. 'The improvement is not yet firmly established. This increase in consumer spending and sales growth has so far not spread to all sectors in the high street,' he said.

Sales growth has been concentrated among big store chains and mail order. Small chains have seen only sluggish growth and single outlets report sales down on last year. Grocers, clothes shops, confectioners, hardware and bookshops did best.

A three-to-one majority of wholesalers reported that sales were higher in March than a year earlier, compared with a majority reporting a fall in sales in the year to February. They expect a similar improvement in April, with stocks of unsold goods falling.

The optimism among retailers and wholesalers regarding sales in April comes as Gallup reports a fall in consumers' confidence in their own financial circumstances to a six-month low. Consumers' willingness to buy expensive items is also at its lowest this year. But optimism about the economy has improved sharply since March and people are less worried about rising unemployment.

Gallup's results may reflect worries about Budget tax increases, although people are less concerned about their financial situation than immediately after the Budget.