LONDON: Optimism among UK retailers about their business prospects for the next three months is at its highest level since May 2002, according to the Confederation of British Industry (CBI), a trade body.

Of the 142 firms questioned in the CBI's latest quarterly distributive trades survey, a balance of +25% expect their overall business situation to improve over the next quarter.

Over half (51%) of UK retailers reported that sales volumes in August were up on a year ago, while 14% said they were down, giving a sales balance of +37% – its highest level since February and well above the +27% forecast by economists.

Furthermore, sales expectations for September rose to +42%, a four-month high, while the volume of internet sales grew strongly in August (+47%) and is expected to increase at an even faster pace next month (62%).

"The high streets have been bustling with shoppers this summer and it is good to see firms so optimistic about their business prospects for the next three months," said Katja Hall, the deputy director-general at the CBI.

"Retailers looking forward to stronger growth in September are keeping their shelves well-stocked in anticipation," she added.

Other positive findings in the CBI report included feedback that the number of retail jobs increased +12% on a year ago, its fastest rate since November 2013, while investment intentions for the year ahead improved with a balance of +14%.

However, there was a mixed picture for retailers – sales volumes rose particularly strongly among grocers (+60%), chemists (+66%), and furniture and carpet retailers (+63%), but specialist food and drink retailers reported a sharp fall in sales on a year ago (-34%).

The CBI retail survey coincided with further good news for the UK economy after research firm GfK revealed that its latest monthly consumer confidence survey showed UK confidence to be at its highest level since March 2005.

UK consumer confidence increased three points in August to +1, GfK said, and all five measures, such as consumers' personal financial situation and major purchase intentions, saw increases.

Nick Moon, managing director of social research at GfK, said it looked like "we might be in a new period of relative stability", although he also cautioned that there is no guarantee how long this situation will last.

"There is no guarantee how long this stable position will last – a rush of good or bad economic news could set off a marked rise or fall, but things could stay like this for a while," he said.

Data sourced from CBI, GfK; additional content by Warc staff