18 September 2003 | Robin Parker
Retail stocks reached their lowest level for two and a half years as shoppers cleared shelves of summer goods during August's heat wave, according to the first economic snapshot.
But sales of clothing and shoes were "disappointing" for the time of year. However, retailers remain confident that business will turn around this month, the Confederation of British Industry's quarterly Distributive Trades survey reveals.
Shops appeared unprepared for restocking fast-selling items, such as fans and barbecues. More than a quarter of retailers cut their orders with suppliers year-on-year.
Stocks hit their lowest level since February 2001, although this was offset by the fastest increase in prices in two years.
Ian McCafferty, CBI chief economic adviser, said: "The August heat wave proved to be a turn-off for shoppers in some sectors. However, retailers' strong expectations for September suggest the slowdown was just a blip."
The findings follow strong signs that purchasers in services, manufacturing and construction firms are confident of growing their business.
The monthly purchasing managers' indices for manufacturing and services, compiled by CIPS and NTC Research, both grew after several months of mixed fortunes, while construction's expansion continued.
The manufacturing PMI rose to 51.9, the highest level since May 2002. It marked two consecutive months of growth, which is indicated by an index of above 50.
New export orders rose at the sharpest pace for 15 months following a dip in July, fuelled by a combination of competitive exchange rates and improving trading conditions in the US.
The findings were supported by the Engineering Employers' Federation, which said in its quarterly report that manufacturing had better growth prospects than at any time in the past four years.
Fewer companies plan to scale back investment over the next year, and fewer engineering jobs have been cut in the past quarter than in the past two years.
Meanwhile, more than a quarter of the 130 construction firms surveyed by CIPS and NTC Research said activity had grown month-on-month owing to new business and work beginning on previously secured contracts.