The sharp fall in retail sales has begun to slow as supermarkets continue to grow, but record job losses across many sectors painted a bleak picture as the CBI released its report this week.
Although investment plans and business sentiment remain very weak, the latest sales figures were not quite as poor as retailers had feared and the supermarkets recorded strong sales growth in February.
The CBI's latest Distributive Trades Survey showed that 27 per cent of retailers said year-on-year sales volumes rose in the first half of February, while 52 per cent said they were down.
Grocers reported a strong improvement, with a balance of 60 per cent, reporting an increase in sales volumes on a year ago.
The quarterly questions showed that employment conditions worsened sharply over the year to February, and almost half of all retailers said they had had to cut their headcount, which was the lowest since the survey began in August 1983.
Sales for the time of year were reported to be poor by 39 per cent of retailers, with the forecast for March looking equally negative. The three-month moving average of sales volumes, which levels out monthly peaks and troughs, remained weak.
Sales volumes in the wholesale sector fell over the year to February and are expected to fall at a similar rate in March - however, average selling prices increased, albeit at the slowest rate for 18 months.
The movement in sales volumes was mirrored by the volume of orders placed upon suppliers, which fell over the year to February but at a slower pace than January.
Retailers' confidence in their sector remains low, with 26 per cent expecting the retail business situation to worsen over the next three months. Investment intentions remain very weak but are not as bleak as November.
Andy Clarke, chairman of the CBI Distributive Trades Panel, said: "February was another tough month and sadly many retailers are cutting jobs as shoppers stay away and the recession deepens. But conditions were not quite as harsh as they were last month and in the run-up to Christmas.
"Supermarkets enjoyed some pretty strong growth, proving that, as the flight to the value end of the market continues, those with the right offering can fare well during these tough times.
"March looks similarly testing but we hope that, as the year goes on, lower interest rates and falling inflation will encourage a pick-up in spending."
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