U.K. Retail Sales Increase More Than Forecast on Heatwave
U.K. retail sales rose more than economists forecast in July as the heatwave boosted demand for food and alcohol.
Sales including fuel increased 1.1 percent from June, the Office for National Statistics said today in London. The median forecast of 21 economists in a Bloomberg News survey was for a 0.7 percent gain. Sales have gained for three consecutive months, the first time that’s happened in 4 1/2 years. From a year earlier, sales climbed 3 percent in July, the most since January 2011.
The data add to recent surveys of a strengthening economy after services, manufacturing and construction all improved in July. Bank of England Governor Mark Carney has introduced forward guidance to give consumers confidence that borrowing costs will remain low, while spending was boosted last month as Britain experienced its third-warmest July on record.
“Underlying sales momentum looks to be building,” Philip Shaw, an economist at Investec Securities in London, said before the data were released. Shoppers were “encouraged out by the improvements in consumer confidence that have been emerging over recent months.”
In the three months through July, retail sales rose 1.8 percent compared with the previous quarter, the most since March 2004, the statistics office said.
The monthly increase was led by food, which jumped 2.5 percent. Textiles, clothing and footwear fell 0.2 percent. Excluding fuel, retail sales increased 1.1 percent and were up 3.1 percent from a year earlier.
The Meteorological Office said Britain had its most prolonged period of hot weather since August 1997 last month. Economists also noted a boost to sales from sporting events such as Andy Murray’s Wimbledon tennis championship victory.
Kingfisher Plc (KGF), Europe’s largest home-improvement retailer, said last month that sales rebounded in the second quarter as warmer weather stoked demand for garden furniture and barbecues. Same-store sales rose 2.5 percent in the 10 weeks ended July 13 after a 4.2 percent drop in the previous quarter.
Unemployment data yesterday showed jobless claims fell for a ninth straight month in July, declining 29,200 to 1.44 million. That took the claimant-count rate to 4.3 percent, the lowest since February 2009. The broader three-month unemployment rate remained at 7.8 percent. That measure is now in the spotlight after Carney pledged to refrain from raising interest rates until it falls to 7 percent. The BOE doesn’t see that happening until at least the fourth quarter of 2016.
The labor-market data highlighted the challenge facing consumers as wage growth continues to trail behind the rate of inflation. Average earnings excluding bonuses grew 1.1 percent in the three months through June from a year earlier, while consumer prices are rising by 2.8 percent.