A Slippery Slope

*** More woe on the high street

*** A consumer-led UK recession...a commodities-led Chinese boom

*** Why the gardening sector is blooming...turning bullish on Europe...and more...

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------------------- - For months retailers have been lining up to bemoan tough trading conditions on the high street: sliding house prices and five rate hikes over the past 18 months have prompted indebted consumers to padlock their wallets. And the complaints queue is set to get longer.

- Yesterday House of Fraser reported a 3.2% fall in like-for-like sales over the past 19 weeks. While their fashion sales climbed, they were hit by a fall in household goods as the air continues to seep out of the property bubble, the bigger ticket items are being left on the shelf. The latest retail figures from the Office of National Statistics tell a similar tale. Sales volumes in DIY or household stores in the three months to May were just 0.3% up on last year, the lowest growth rate since January 1993.

- Overall sales volumes climbed by 0.1% month-on-month in May, bringing the annual rate of increase 1.3% to a six-year low. But that's not all strong price competition has driven the growth rate in the actual value of retail sales to its lowest level since July 1967 - just 0.9% in the three months to May.

- 'Consumers are sliding down a slippery slope', said David Brown of Bear Stearns International to bbc.co.uk, raising the spectre of a 'consumer-led recession'.

- The markets shrugged off the bad news, however, preferring to concentrate on a commodities-led Chinese boom. This week's unexpectedly high Chinese industrial production growth, which is lighting a fire under copper prices, continued to buoy miners, while an upgrade of BHP Billiton by ABN Amro added to the cheer. The steel sector enjoyed a good day too yesterday, as Corus unveiled plans to pay its first interim dividend in five years. The FTSE 100 edged up by 0.5% to 5,045, a shade below last week's four-month high.

- Meanwhile, over in the oil market, crude prices kept ticking up following OPEC's quota increase and its call for industrial countries and large oil companies to build more refineries. Spare refining capacity has slid to about 5% of total capacity. It doesn't help that the quota increase merely formalises the currrent output levels, while fears over stronger demand in the fourth quarter are also bolstering oil prices. London Brent futures rose 0.8% to $55.70.

------------------- - 'As a long-standing Eurosceptic, I never thought I would pound the table on this region', says Stephen Roach of Morgan Stanley in the bank's Global Econmic Forum. But the demise of the EU Constitution is the best news to have come out of Europe in ages. For now that the drive towards political integration has foundered, Europe is free to concentrate on solving its structural problems and there are good reasons for optimism on this front.

- Last month's Chelsea Flower Show proved once again how popular gardening has become with the British public, says Euan Stuart in today's MoneyWeek. But it's about to come into full bloom, thanks to the negative economic indicators and falling consumer confidence. Why? Apparently, when the economy turns sour we turn to our gardens, and that means lots of cash going into garden centres' tills. On top of this there is consolidation going on in the sector and investors' appetites for their shares are growing.

- PartyGaming can't seem to stay out of the news this week. Yesterday, its IPO was overshadowed by suggestions that its owners could face prosecution in the US because online poker is illegal. And its owners are a colourful bunch. PartyGaming was the brainchild of Ruth Parasol, a former 'porn princess' and qualified lawyer. She then got an Indian computer geek called Anurag Dikshit to come on board for the technical stuff. Add in a marketing man, Vikrant Bhargava and Parasol's husband and between them they will be worth $9bn if the launch of PartyGaming onto the FTSE 100 at the end of this month goes smoothly.