High street sales are growing at their fastest rate since the slump began, according to figures today from the CBI, the employers' group.

Some 41 per cent of retailers said that sales volumes for the year to October had risen, while 33 per cent said that they were down.

The resulting balance of plus 8 per cent was the highest since December 2007, when the balance was also plus 8 per cent, the CBI said.

The findings far surpassed analysts' expectations of a balance of 3 per cent.

In August, the figure was minus 16 per cent.

Demand for furniture, carpets and other household goods was particularly strong, the survey found, reflecting the pick-up in the housing market.

In a further boost, the survey found that a balance of 19 per cent of retailers expect sales volumes to improve next month — the most optimistic since July 2007.

The survey will renew hope that the country is climbing out of the slump. They follow a plethora of more upbeat data on the economy and housing market that indicates renewed confidence among consumers.

However, hopes that the worst is now behind the high street were dealt a blow on Friday when shock data revealed that the UK economy contracted by 0.4 per cent between July and September.

The data shattered hopes that Britain had pulled out of recession and signalled the country's longest downturn since records began in 1955.

Howard Archer, chief UK and European economist at IHS Insight, said that the CBI survey gave hope that "the economy will finally return to growth in the fourth quarter".

He pointed out, however, that spending on consumer services, rather than retail sales, had been the biggest hindrance to a pick-up, adding that the October comparison was against a very weak performance a year earlier.

Aside from furniture and carpets and other durable household goods, sales at stationers, footwear retailers and booksellers were also strong, the CBI found.

Analysts said that these sectors had benefited from the recent, limited improvement in housing market activity and a move by some consumers to make their purchases ahead of January's increase in VAT.

VAT was temporarily reduced from 17.5 per cent to 15 per cent in December in a bid to boost consumer spending. It will return to its original level in January and high-street sales are expected to grow further ahead of the increase.

Andy Clarke, chairman of the CBI distributive trades panel, said: "The retail sector seems to be finding its feet again after a challenging year, and the outlook for November is encouraging."

It was "heartening", he said, to see signs of life in sectors related to the housing market, which had suffered such a torrid two years.

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