Double blow for UK economy as manufacturers and retailers struggle

By SCOTT REID
Published on 24/05/2012 02:51

BRITAIN’S economy was dealt a double whammy of bad news today as retail sales fell at their fastest monthly pace in more than two years, while manufacturers’ confidence dwindled amid falling orders.

The Office for National Statistics (ONS) said retail sales volumes fell 2.3 per cent in April – the biggest drop since January 2010 and more than twice as fast as forecast.

Clothing retailers suffered their worst sales performance in nearly four years as heavy rain dampened demand for summer outfits.

The headline slide was distorted by a drop in petrol and diesel sales following the threat of a fuel tanker strike the previous month.

Stripping out the impact of fuel sales, total retail sales volumes were down 1 per cent, the worst performance excluding fuel in nearly a year, the ONS said.

Howard Archer, chief UK economist at IHS Global Insight, said: “Looking through the factors weighing down on retail sales in April, it is evident that there are currently a lot of pressures on consumers as they face uncertain and worrying times.

“They seem likely to be cautious overall in their spending over the next few months at least.”

Separately, the CBI’s monthly industrial trends survey revealed that factory orders had deteriorated more than expected this month.

The report’s total order book balance fell to -17 from -8 in April, below expectations for a reading of -10, and its lowest reading since December.

Ian McCafferty, CBI chief economic adviser, said: “Export order books are holding up. Nevertheless, if the crisis in the eurozone continues, it is bound to have a dampening effect on sentiment in coming months.”