The economy has received another shot in the arm with figures showing that the pace of house price falls slowed in May while home sales picked up.

However, retail sales figures have put in question whether April’s jump in consumer demand would be sustained.

About 6 per cent of estate agents across the UK said that property values had risen in May, while 42 per cent said that prices fell, according to figures from the Royal Insitution of Chartered Surveyors (RICS). The resulting seasonally adjusted balance of -44 is up from -58 in April, suggesting that the pace at which prices are falling is easing. May’s reading was the highest since November 2007.

Buyer inquiries at estate agencies last month rose for the seventh consecutive month in May — at its fastest pace in a decade. There was a jump in sales, with estate agents’ branches reporting an average of 11.8 transactions in the three months to May, up from 10.6 in April. Agents are also bullish about the outlook, with 40 per cent more expecting sales levels to increase rather than fall in the coming months, the highest figure recorded since the series began in 1998. The figures come days after Halifax said that house prices had risen by 2.6 per cent in May and a majority of City economists forecast that the recession could pause during the summer.

Ian Perry, the RICS spokesman, cautioned against reading too much into the new figures. “On the face of it, the housing market does appear to be close to bottoming out, with activity picking up in a material way and prices at last stabilising. However, with the economic backdrop still quite uncertain, unemployment set to continue increasing sharply and finance for first-time buyers still in short supply, there are a number of significant obstacles for the market to overcome over the coming months.”

Separate figures show that while employers are becoming more circumspect about cutting staff, the availability of new jobs will linger at a 17-year low in the next three months. One business in ten expects to cut jobs between July and September, while only 6 per cent of firms intend to hire new workers. The seasonally adjusted balance remains at -6 for the second quarter in a row, the lowest level since 1992.

The threat of unemployment has dampened the mood on the high street, with like-for-like sales falling by 0.8 per cent in May after a 4.6 per cent jump in April, according to figures from the British Retail Consortium (BRC).

Food sales slowed, although they picked up late in May as households stocked up on ingredients and implements for barbecues. Sales of clothing and footwear declined compared with strong sales in a very sunny May last year, when consumers splashed out on lighter clothes. However, the 0.8 per cent fall was one of the most modest monthly declines since July last year.

Nevertheless, analysts had hoped for better sales figures. Helen Dickinson, the head of retail at KPMG, said that while some consumers had lost their jobs or feared that they may do so, “there are also those with greater disposable income due to lower mortgage payments, easing inflation and lower fuel costs. It remains to be seen when those who have cash to spare will start spending again”.

Stephen Robertson, directorgeneral of the BRC, said: “This May was always going to be difficult because the comparison is with strong May sales last year, which delivered some of 2008’s best growth figures. [But] the turnaround in sales of bigticket items, such as furniture and large electricals, which would indicate real change in the mood of customers, still eludes us.”

Bank consults business

The Bank of England moved to appease critics protesting that its multibillion-pound purchases of government and corporate IOUs have failed to ease the financial stresses afflicting companies. Business leaders welcomed a move by the Bank to consult on expanding its buying of bonds and other debt securities to include larger volumes of commercial paper — short-term corporate debt — in an effort to ease the supply of working capital finance to businesses.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive