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* Next H1 profit up 8.2 pct to 272 mln stg
* Morrisons H1 profit down 10 pct to 401 mln stg
* John Lewis H1 profit up 3.9 pct to 116 mln stg
* Argos Q3 like-for-like sales up 2.7 pct, Homebase up 11pct
* Ocado Q3 sales up 16.4 pct
By James Davey
LONDON, Sept 12 (Reuters) - Some of Britain's biggestretailers on Thursday cast doubt over signs of economicrecovery, saying consumer spending - the largest engine ofgrowth - was likely to remain subdued until wages rise ahead ofinflation, which could be over a year away.
Next, Britain's No. 2 clothing retailer, Wm MorrisonSupermarkets, the nation's No. 4 grocer, and Home Retail, its largest household goods retailer, said earlyindications of a recovery, such as a pick up in lending bybanks, were yet to have an impact on consumers' wallets.
"For most people - and we've got 12 million customers - atthe end of the month there's no more money in their pocket,"Morrisons Chief Executive Dalton Philips told reporters, notingthat higher levels of spending in the London area were notindicative of the rest of the country.
Next CEO Simon Wolfson, a prominent supporter of Britain'sruling Conservative Party who sits in the upper house ofParliament, was similarly downbeat.
"While there is some relief in the economy, I think it wouldbe a mistake to characterise that as a full blown recoverybecause a recovery will require growth in real earnings not justmore borrowing," he told Reuters.
He reckons a return to earnings growth ahead of inflationwill take at least a year and warned a loosening of the mortgagemarket alongside government housing market stimulus measureslooked likely to result in an "unhelpful house price bubble",which would be a drag on the economy when interest rates rise.
On Monday, British finance minister George Osborne said theUK economy had turned the corner and that its growth vindicatedthe government's austerity programme.
However, on Thursday Bank of England Governor Mark Carneywarned signs of recovery could prove to be another "false dawn."
Morrisons reported a 10 percent drop in first-half profits,hit by its late entry into fast-growing online and conveniencestore markets. It also cut capital expenditure guidance toreflect a shift in investment to the new channels and away fromtraditional stores, and kicked-off a review of its 9 billionpounds ($14.2 billion) property portfolio, which couldpotentially raise some money for shareholders.
Though it is budgeting for "no significant change to thechallenging economic environment in the near future," it expectsa better second-half performance and a full-year outcome in linewith expectations. Morrisons shares rose up to 5 percent.
Next posted an 8.2 percent increase in first-half profit butwas reliant on a strong performance from its Directory internetbusiness to offset sales falls in traditional stores - a growingtheme across Britain's retail sector. It maintained its guidancefor full-year sales growth of 1.5-3.5 percent.
SUMMER BLIP?
While official data and surveys have shown an improvingoutlook for UK consumer spending, which generates abouttwo-thirds of gross domestic product, retailers remainwary.
J Sainsbury, Britain's No. 3 grocer, and B&Q ownerKingfisher, the No. 1 home improvement group, both saidthis week it was too early to call a UK recovery, withSainsbury's describing strong trading across the groceryindustry in the summer as "a blip" due to helpfully hotweather.
Also on Thursday, Home Retail posted weather-assistedsecond-quarter underlying sales rises of 2.7 percent and 11percent at its Argos and Homebase businesses respectively, butwas still cautious. "We continue to expect consumer spending toremain subdued," said CEO Terry Duddy.
Employee-owned John Lewis, which runs departmentstores and the upmarket Waitrose grocery chain and has a bias tothe more-affluent south east of England, posted a 4 percent risein first-half profit and said it expected to trade positively inthe second half.
"What we're definitely not seeing is a return to what Iwould describe as conspicuous consumption," said Andy Street,managing director of the department stores division.
Elsewhere, online grocer Ocado, which struck ajoint venture deal with Morrisons in May, reported a 16.4percent rise in third quarter sales in line with expectations,while home furnishings retailer Dunelm, posted a 12.3percent rise in full-year profit.
