Retailers are suffering the knock-on effects of the housing slowdown with sales of furniture, DIY goods and carpets in decline.

The overall drop in sales, across all sectors, was greater than expected last month according to the CBI's Distributive Trades Survey (DTS).

Forty-one per cent of retailers said their sales volumes were down compared with May last year, with just over a third reporting an increase.

Expectations are for another year-on-year decline in June.

The three month moving average, which measures the underlying trend in sales, is at its weakest since August 1992, the CBI said.

Sales for the time of year were viewed as below average, as they have been for the last eight months since house prices stalled.

Thirty-six per cent of firms said sales were poor for the time of year while 22 per cent said they were good.

Meanwhile, stock levels are still higher than they need to be despite retailers cutting back orders placed on suppliers for the fifth consecutive month.

Firms expect to cut orders again in June, which will push stock levels closer to their longterm average relative to expected demand.

Graham Botting, co-director of Cottage Carpets in Lindfied, near Haywards Heath, said: "Over a nine-month period the last three have been excellent but the preceding six were diabolical so, yes, the housing slowdown has clearly had an effect.

"We have tried various promotions recently which have generated an interest but, to be honest, we are not sure why the last few months have picked up.

"Speaking to others in the trade it has definitely been against the grain."

John Longworth, executive director of Asda and chairman of the CBI's DTS Panel, said some retailers were doing better than others.

He said: "Sales of groceries, books and stationery are up on a year ago but those of big ticket items, furniture, carpets, DIY goods and clothing are down.

"Broadly speaking, the categories of goods most closely correlated with housing transactions have fared worse than the average over the past year."

Shelf prices were down compared to a year ago, according to the survey.

June 8, 2005