Fashion retail still in recovery mode

Fashion retail sales are still in recovery mode, with a slow start to 2010. Retail sales endured a weak first quarter, according to data from the Office for National Statistics, as a rise in VAT, cold weather and the still fragile state of the economy kept shoppers away. Sales volumes, excluding fuel, fell by 0.6 per cent between January and March compared with the previous three months, the weakest quarter of sales since 1991.

Sales so far this year have been very volatile from month to month, with January seeing a 2.3 per cent drop from December, as heavy snow and the return of VAT to 17.5 per cent put off shoppers.

February reversed much of that weakness with a sharp 2 per cent bounce back in sales, but March looked relatively flat, with sales rising only 0.2 per cent.

The decline in sales volumes in the first quarter is unlikely to have much impact on economic growth in the same period, as retail sales make up only a small fraction of the economy. But it adds to the likelihood that growth in the first quarter may have been subdued.

However, manufacturing appears to be bouncing back from recession with increasing pace, largely thanks to a pick up in demand for exports.

The quarterly survey of industry from the CBI, the employers’ organisation showed orders rose significantly in the three months to April for the first time since the beginning of 2008, as export orders grew at their fastest since 1995.

Image: Manchester High St