June 25, 2020 / 11:25 AM / 12 days ago

UK retailers gloomy before June's lockdown easing

People walk by Regent street after the reopening of retail stores, amid the spread of the coronavirus disease (COVID-19), in London, Britain June 16, 2020. REUTERS/Hannah McKay

LONDON (Reuters) - British retailers remained gloomy in the run-up to a relaxation of coronavirus lockdown rules earlier this month which allowed non-essential stores to reopen to the public for the first time since March.

The Confederation of British Industry said 62% of the retail chains it surveyed between May 27 and June 12 feared weak consumer demand would hamper recovery from the slump in sales of most items other than food and drink.

“Despite retailers working flat out to make sure they are safe and ready to open their doors, outside the grocery sector most retailers expect sales to be far below where they were this time last year,” CBI chief economist Rain Newton-Smith said.

Staff absence due to ongoing school closures was also a problem for most firms, the survey showed.

The CBI’s headline retail sales barometer rose to -37 in June from -50 in May, slightly short of economists’ average expectation in a Reuters poll and well beneath its level at the start of the year. Expected sales for July are worse.

Official data for May showed retail sales volumes jumped by 12% after tumbling in April, but were still around 10% lower than a year earlier.

Since June 15 non-essential stores have been able to reopen to the public, but they must still comply with social distancing rules which limit the number of shoppers. Some stores have their own restrictions on customers touching goods or trying on clothes to reduce the spread of COVID-19.

Samuel Tombs, an economist at Pantheon Macroeconomics, said the CBI data did not always track official figures closely, and that there could be a temporary recovery as shoppers made larger purchases they had delayed during the lockdown.

But he was less confident about later in the year - when government job support schemes are due to end - and predicted sales would be 5% down on pre-coronavirus levels in the final three months of 2020.

Reporting by David Milliken; Editing by Alistair Smout

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