CONDITIONS on UK high streets have improved but retail sales growth is modest compared with last year, according to the Confederation of British Industry's latest survey.

Retail sales were higher in May than a year earlier, the second consecutive month of year-on-year growth, following a difficult start to 2003 when sales barely grew at all.

For the second month in a row, sales growth was better than expected and it is expected to be slightly stronger in June.

While sales growth is better than in the first quarter of 2003, it is well below the rates of growth seen last year and longer term averages.

For the first time in six months sales are described as above average for the time of year. But on the downside, retailers are taking a 'wait and see' approach to decisions about investment spending on things such as buildings, vehicles, equipment and fittings.

Alastair Eperon, Chairman of the CBI's Distributive Trades Panel said: "Spending over the past couple of months has been boosted by the good weather, low unemployment, the end of the Iraq conflict and the prospect of another rate cut.

"The underlying trend is creeping back up but it is still well down on the growth seen through most of 2002.

"Retailers expect some improvement in business conditions during the second half of the year but that is only relative to the weakness of their current situation.

"Nervousness about how sustainable the sales recovery will be has severely hit retailers' willingness and ability to commit to investment."

Sales were higher than a year ago in almost every retail sector. Shops selling footwear and leather goods saw the strongest growth, followed by grocers.

The biggest year-on-year rates of decline were among furniture and carpet retailers and chemists.

For the tenth month in a row motor traders said sales of new cars were down on 12 months earlier but the rate of decline was less severe than in recent months and not as bad as had been expected.

However, Dennis Grant, chief executive of Swindon Chamber of Commerce, said: "There's statistics and there's statistics. Certainly in Swindon, consumer spending is down. The only area where there is an increase is in holidays. Prospects don't look promising."