And their caution is helping to slow the Island's economic recovery, says top banker Mr. Charles Vaughan-Johnson.

"Bermuda is showing signs of continuing to emerge slowly from the recession,'' said the new Bank of Bermuda head in a message to shareholders.

The Island was benefiting from strong growth in the US, he said.

"There is an increasing number of visitors coming into the Island; the signs look modestly better for tourism in 1994; the international financial sector continues to grow.'' But he added: "We see no signs of a strong consumer-driven local recovery, although retails sales have recovered modestly.'' Employment "should pick up as the economy expands'', he said, although it usually lagged behind a recovery.

Mr. Vaughan-Johnson's message has been reinforced by the latest retail sales figures.

Sales in February were up 7.7 percent on last year -- boosted by residents buying new cars and a rush to purchase liquor before the Budget.

But in general stores, sales were down 1.1 percent on last year.

Spending on overseas shopping trips also went down 4.2 percent -- the first fall since December, 1992.

This was probably caused by a drop in residents going abroad during February, say Government statistics experts.

Last month the head of a top Front Street store demanded Government action to save merchants suffering record losses.

Mr.

Roger Davidson, president of Smith's department store, was criticised by Ministers after he said shops were being hit by customs duties, red tape, residents buying abroad and a lack of capable workers.