Retail growth prompts question - is it not as bad as we thought?
Better sales figures for July, and an upward revision of June's figures, increase hopes of recovery
UK RETAIL sales grew by 0.3 per cent last month, surprising economists who had predicted a fall of 0.1 per cent. The Office for National Statistics also reported this morning that, compared with last year, sales volumes were up 2.8 per cent.
More significantly, the ONS revised its previous data for June, showing sales were not as grim as had been calculated. Originally retail growth for the month was worked out at only 0.1 per cent but the ONS now says it was actually 0.8 per cent.
The Guardian reports that the high street petrol price war prompted the rise in retail figures. In a fight for more customers, supermarkets slashed their rates, stimulating a fuel sale rise of 2.6 per cent in July. In comparison food sales rose by only 0.4 per cent and clothing and footwear actually fell by 0.1 per cent.
Part of this was based on the assumption that construction output fell by 5.2 per cent over the quarter. Since then, the ONS has said that the drop was in fact only 3.9 per cent. Coupled with the new retail statistics, official GDP figures are now expected to be revised to reflect a less severe recession.
James Knightley at global financial institution ING said the results were "pretty encouraging, especially with decent upward revisions to June... We continue to have doubts about the message from the GDP report, suggesting the UK is in a deepening recession."
The improvement to the economy is expected to continue through August with the Olympics in full swing. (The July figures reflect only two days of the Games.)
Amit Kara of banking giant UBS said the new data was "consistent with the view that Q3 [the third quarter] will be a lot better for overall economic growth in the UK".