U.K. Retail-Sales Surge Lifts Hopes for Second-Quarter Growthby
All store categories posted increases in sales last month
Figures paint better picture than surveys, trading statements
U.K. retail sales began the second quarter with more momentum than economists forecast.
The volume of goods sold in stores and online rose 1.3 percent in April from March, more than double the 0.6 percent increase forecast in a Bloomberg survey, Office for National Statistics figures published on Thursday show. Excluding auto fuel, retail sales jumped 1.5 percent.
The increase follows two months of declines, although the fall in March was revised to just 0.5 percent from 1.3 percent. In the three months through April, retail sales grew 0.3 percent, the weakest pace since September 2014.
The figures paint a stronger picture than recent surveys and trading statements. Clothing merchant Next Plc cut its sales forecast for a second time this month, shortly after the collapses of department-store chain BHS Ltd. and formalwear retailer Austin Reed. Weak reports from the British Retail Consortium, the Confederation of British Industry and GfK had suggested heightened consumer caution ahead of the June referendum on European Union membership.
“Despite the doom and gloom in the headlines, retail sales are in good shape,” said Alan Clarke, an economist at Scotiabank in London. “This marks a great start to Q2 and could help to avert too much of a slowdown in GDP growth.”
At PricewaterhouseCoopers, Chief Economist John Hawksworth said consumer spending remains “relatively resilient” in the face of uncertainty around the referendum.
The pound rose following the data and was at $1.4642 as of 11:04 a.m. London time, up 0.3 percent on the day.
Food sales rose 0.1 percent last month and non-food sales grew 2.5 percent, with all retail categories showing increases. Price promotions helped clothing sales rise 1.3 percent, despite cool spring weather hitting demand for fashion lines. Overall sales were up 4.3 percent from a year earlier.
Measured by the deflator, prices at stores and petrol stations fell 0.2 percent in April from March, leaving the value of sales up 1 percent. Sales values rose just 1.2 percent from a year earlier as prices dropped 2.8 percent.
Retail sales account for almost 6 percent of gross domestic product. Economic growth slowed to 0.4 percent between January and March and is forecast to cool further this quarter.