UK retailers have this month enjoyed their fastest annual pace of sales growth since June and are employing more staff than this time last year, according to a survey which provides hope for the key festive trading period.

In the CBI's latest monthly distributive trades survey, conducted between October 30 and November 16 and published yesterday, 49% of retailers said sales volumes were ahead of the same time last year. Only 16% reported sales were lower.

The net 33% reporting a year-on-year rise in sales volumes was the strongest such balance since June.

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Meanwhile, 31% reported that employment levels were higher than a year earlier with only 24% saying staffing was lower.

Looking ahead, 24% of retailers expected employment levels next month to be higher than last December and only 15% predicted staffing would be down.

In spite of these positive findings, retailers viewed sales in the first half of November as lower than normal for the time of year.

While 20% said sales were good for the time of year, 35% declared volumes were poor.

And only 19% anticipated more capital expenditure in the coming year than in the preceding 12 months. Meanwhile, 31% predicted less capital expenditure over the next 12 months.

But 23% of retailers expected the business situation would improve over the next three months, while only 16% anticipated it would deteriorate.

Anna Leach, CBI head of economic analysis, said: "This month's survey is reason to be cheerful as we head into the festive period. Retailers across the board will be heartened by these encouraging results.

"The rise in employment, along with expectations for improvement in the business situation over the next quarter, point to a welcome boost to the sector.

"But the fact retailers are still reluctant to authorise new capital expenditure shows there is some way to go before high street activity is back to normal."

Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The CBI survey indicates that retailers are pretty upbeat about sales prospects for the critical month of December."

However, he added: "While the robust ... survey is very welcome news, there needs to be some caution. It should be noted the strong October CBI survey contrasted markedly with a weak survey from the British Retail Consortium and was completely at odds with hard data from the Office for National Statistics which showed retail sales volumes fell back by 0.8% month-on-month in October."