08 August 2002 | Robin Parker
Retailers are placing fewer orders with suppliers to counteract the worst sales figures for almost three years.
More than a third of retailers will cut the volume of orders in August, according to the Confederation of British Industry's latest distributive trades survey. The slump has hit wholesalers hardest. Half are expected to order less.
The CBI said retailers were trying to reduce stock levels, which have risen to well above the long-term average because of weak consumer demand.
The findings follow data from National Statistics (NS), suggesting retail sales fell in two consecutive months for the first time since autumn 1997.
High-street sales dipped by 0.7 per cent in June compared with the previous month, after a 0.5 per cent decline in May. Household goods reported the greatest decline of 4.3 per cent.
Sales are believed to have been hit in part by the World Cup and the Jubilee celebrations. The NS data echoes the CIPS/NTC Research services purchasing managers' index for June, where the new order index fell by 4.5 points because demand was weak.
But Alun Powell, a senior economist at HSBC, said: "Taking the earlier increase in April and May, the 1.7 per cent growth in sales over the four months is still quite fast."
• Manufacturers faced the first contraction of demand this year in July, when the PMI fell to 48.9, below the 50 mark that indicates no change. Reduced imports were largely to blame.