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UPDATE 1-UK Apr retail sales far stronger than expected-CBI

Published 04/28/2009, 06:40 AM
Updated 04/28/2009, 06:48 AM

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LONDON, April 28 (Reuters) - British retail sales unexpectedly jumped at their sharpest rate in more than a year in April but the figures may have been distorted by the timing of Easter, a survey showed on Tuesday.

The Confederation of British Industry's distributive trades survey balance rose to +3 in April from -44 in March. That was the first positive reading since March 2008 and the highest since January 2008.

It was also much higher than analysts' forecasts of -40 and the biggest one-month jump in the index on record. But the survey may been affected by Easter -- a big shopping weekend -- falling in April this year and in March in 2008.

"The good turnout by shoppers over this year's later Easter may well have influenced the April retail figures, and while they mark a respite, they should not be taken as an indication of a high street revival," Andy Clarke, chairman of the CBI distributive survey panel and chief operating officer of Asda.

Sterling rose and gilt futures fell as the survey offered hope that the economy -- which shrank by 1.9 percent in the first quarter -- could be over the worst.

And while retailers predicted sales resuming their decline in May, the expectations balance stood at -15, which was the highest since July 2008.

"These improvements might point to a genuine pick-up in high street activity, perhaps as the extra spending power freed up by the sharp fall in inflation offsets the negative effects of rising unemployment and falling house prices," said Jonathan Loynes of Capital Economics.

"But we would hesitate before reaching that conclusion. Not only is the survey often quite volatile from month-to-month, but the general conditions facing consumers do not look consistent to us with solid spending growth."

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