26 Mar 2015
UK retail sales volatile, expected to rise to 0.5% in February – ING
FXStreet (Barcelona) - James Knightley, Senior Economist at ING, comments that UK retail sales are volatile, but the underlying story remains positive with consumer spending set to be the key growth driver in 2015.
Key Quotes
“Retail sales fell 0.3% MoM in January and 0.7% MoM when motor fuel is excluded, but it is important to remember that this series is incredibly volatile. They had also fallen in December, but this follows really strong 1%+ MoM gains in October and November.”
“We expect to see more today with the release of retail sales numbers for February. We expect retail sales excluding fuel to rise 0.6% MoM and total sales to rise 0.5%.”
“There is the potential for a significant miss though. The CBI distributive trades survey points to a sharp rise in sales (with weakness coming in March, whereas the British Chambers of Commerce series points to a weaker outcome).”
“Employment continues to rise strongly while pay is starting to rise in nominal terms. At the same time, the plunge in fuel and food prices has led inflation to drop to zero, meaning that real wages are now rising strongly after a near six years of consecutive contraction.”
“With utility bills also starting to move downwards people are starting to see more money in their pockets, which is helping to support consumer confidence.”
“With tax cuts coming through from April we suspect that real household disposable income will increase by around 3.5% this year, which suggests very strong spending power for the household sector. As such, we remain upbeat on the UK economy’s growth prospects, particularly consumer spending.”
Key Quotes
“Retail sales fell 0.3% MoM in January and 0.7% MoM when motor fuel is excluded, but it is important to remember that this series is incredibly volatile. They had also fallen in December, but this follows really strong 1%+ MoM gains in October and November.”
“We expect to see more today with the release of retail sales numbers for February. We expect retail sales excluding fuel to rise 0.6% MoM and total sales to rise 0.5%.”
“There is the potential for a significant miss though. The CBI distributive trades survey points to a sharp rise in sales (with weakness coming in March, whereas the British Chambers of Commerce series points to a weaker outcome).”
“Employment continues to rise strongly while pay is starting to rise in nominal terms. At the same time, the plunge in fuel and food prices has led inflation to drop to zero, meaning that real wages are now rising strongly after a near six years of consecutive contraction.”
“With utility bills also starting to move downwards people are starting to see more money in their pockets, which is helping to support consumer confidence.”
“With tax cuts coming through from April we suspect that real household disposable income will increase by around 3.5% this year, which suggests very strong spending power for the household sector. As such, we remain upbeat on the UK economy’s growth prospects, particularly consumer spending.”