RTTNews - U.K. retail sales unexpectedly declined in May on falling clothing and footwear sales, official data showed Thursday.

A report from the Office for National Statistics showed that retail sales volume decreased 0.6%, while economists were looking for a 0.3% rise. This was the first decline in three months. Textiles, clothing and footwear stores dropped 1.9% during May.

Retail sales volume recorded an annual fall of 1.6% in May. Economists had expected only 0.4% fall in sales. Food store sales were down 1.3%, while non-food store sales declined 3%.

In three months to May, total sales volume was 0.6% higher than in the same period of last year. This is the lowest growth, along with last month and January 1996, since December 1995, the ONS stated. Non food stores sales increased 0.3%, which was partly offset by a 0.2% fall in food sales.

Meanwhile, sales value grew by a seasonally adjusted 1.3% in three months to May. For the month of May, value was down 1.1% from the previous year.

Peter Dixon, analyst at Commerzbank expects retail sales as a whole to show positive growth in the second quarter. On the assessment that non-retail spending declined at a slower pace than in the first quarter, suggests that a fall in household spending of nearly 0.6% is possible for the second quarter.

Analyst said the recovery in consumption would be weak due to the current weak labor market, dropping house prices and high indebtedness. But general retailers would be less badly affected than those dealing on big-ticket items and it is unlikely that retail sales volume would collapse. But analyst sees a period of relatively sluggish growth over the months ahead.

In a separate communique, the ONS said the public sector net borrowing was GBP 19.9 billion in May, up GBP 7.6 billion from the amount borrowed in the same month of the previous year. Economists had expected a borrowing of GBP 19.3 billion in May.

There was a net cash requirement of GBP 18.8 billion in May, up from GBP 9.6 billion required in the previous year. It exceeded the expected amount of GBP 16 billion. In April, the public sector net cash requirement was revised GBP 4.7 billion. Further, the statistical agency said the public sector current budget was in deficit by GBP 17.5 billion.

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