Retail sales slowed in July, but less than expected, after shoppers' heat-induced assaults on the High Street in the previous month.

According to data from the Office for National Statistics (ONS), retail sales fell by 0.4 per cent on the month compared with June's 1.9 per cent surge. Against the same month last year, sales were 4.4 per cent higher in July.

City economists had forecast a decline of about 0.6 per cent as the figures came up against tough comparisons with the soaring temperatures of June, which sent shoppers scrambling for hot weather gear such as barbecues, fans and paddling pools.

Andrij Halushka, economist at the Centre for Economics and Business Research, said: "July's fall in retail sales may have more to do with weather than with anything else."

The weather distortion means that analysts were looking to the three-month figures for a clearer picture of retail sales progress.

John Butler, economist at HSBC, said: "A better guide is retail sales during the past three months, which are up 1.4 per cent or 5.6 per cent on an annualised basis."

This trend was at odds with the Bank of England, which has argued consumer spending is slowing, while official data shows that the pace of growth remains similar to the second half of last year.

Meanwhile, beleaguered manufacturers were offered a glimmer of hope by research showing order books at the best level for nine months.

But any encouragement was limited as the CBI's industrial trends survey said firms did not expect a knock-on effect to output in the next three months.

Friday August 22, 2003