U.K. September Retail Sales Increase More Than ForecastScott Hamilton
U.K. retail sales rose more than economists forecast in September as an increase in furniture demand led a rebound from a slump the previous month.
Sales including fuel increased 0.6 percent from August, when they declined 0.8 percent, the Office for National Statistics said today in London. The median forecast of 21 economists in a Bloomberg News survey was for a 0.4 percent gain. Household-goods sales surged 3 percent, while food-store sales fell 0.2 percent.
Britain’s recovery is strengthening and unemployment is falling, lifting consumer confidence. While the Bank of England has said it will keep its benchmark interest rate at a record low until the economy is expanding at a sustainable pace, pay growth continues to lag behind inflation, squeezing consumers.
From a year earlier, retail sales rose 2.2 percent in September. Excluding fuel, sales increased 0.7 percent from August and were up 2.8 percent from the same month a year ago.
The pound stayed higher against the dollar after the data were released and was trading at $1.6077 as of 9:32 a.m. London time, up 0.8 percent from yesterday.
In the third quarter, total retail sales increased 1.5 percent compared with the previous three months, the ONS said.
Sales of clothing and shoes rose 1.2 percent in September from August. The decline in food sales followed a 2.5 percent slump in August.
While the annual price deflator on all retail sales fell to 0.9 percent in September from 1.6 percent the previous month, the deflator on food sales remained at 3.4 percent, the highest among all the sectors tracked by the statistics office.
Labor-market data yesterday highlighted the pressure on living standards as inflation runs at 2.7 percent. Pay growth slowed to 0.7 percent in the three months through August from 1.2 percent. Public-sector pay fell 0.5 percent, the first decline since comparable records began in 2001.
The data also showed that jobless claims dropped by 41,700 in September, the most in 16 years. That followed a decline of 41,600 in August. The unemployment rate stayed at 7.7 percent.
“Although the intensity of the squeeze from inflation has eased somewhat in recent months, nominal wage growth has deteriorated leading to an acceleration in real earnings falls,” said Blerina Uruci, an economist at Barclays Plc in London. “Given the weakness in the labor market, with the unemployment rate still high and productivity low, prospects for earnings growth remain subdued in our view.”