Employment levels in the retail sector fell by a record amount during May, claims a new survey, but overall sales still increased.
The quarterly distributive trades survey (DTS) from the Confederation of British Industry (CBI) found that 39 per cent of employers reported a fall in the number of positions being filled compared to only ten per cent experiencing a rise.
The negative 29 per cent difference is the highest indication of faltering job levels in the survey's history and continues a two-year decline, analysts claim.
However, retail sales were found to have soared on a year on year basis despite retailers reporting difficult trading conditions and finding themselves under pressure to slash prices.
Thirty-six per cent of firms said their sales volumes had gone up compared to 27 per cent revealing a slide in sales, the biggest positive difference since Christmas 2004 and leading to a predicted rise of 12 per cent next month.
Four per cent more of retailers revealed they had succumbed to competition and lowered their prices, but while the overall sales view was still minus seven per cent, it was the least negative value recorded late 2004.
Sales across individual product areas were incredibly diverse, with the imminent Fifa World Cup lifting purchases of TVs and fridges by 65 per cent, but bad weather during May filtered down to home improvement sales as the DIY slump continued.
However, despite stock levels being down and retail investment decreasing, overall optimism is still at as its highest level for two years, claims John Longsworth, Asda chief executive and chairman of the CBI's DTS panel.
"Everyone has been looking for a pick-up in consumer demand so it is encouraging to see sales increase for some sectors with underlying demand improving overall," he said.
But Mr Longsworth warned that "growth in sales volumes today is still a world away from the rate we were seeing just a few years ago", with retailers continuing to experience intense pressure to lower prices.
"Let's hope that retailers' cautious optimism becomes a reality, with a successful World Cup stimulating demand," the chief executive concluded.