(qlmbusinessnews.com via theguardian.com – – Thur, 18 May, 2017) London, Uk – –
Britain went on a spending spree in April. The shops were full of punters. Online retailers coined it in. Spring brought with it an end to the winter consumer spending blues.
That at least is what the official figures suggest. The Office for National Statistics reported that the volume of retail sales rose by 2.3% last month, smashing City expectations. This, though, is the same Office for National Statistics that said earlier this week that living standards were being squeezed because wages were failing to keep pace with prices. Something doesn’t quite add up.
One explanation is that the ONS has got its seasonal adjustment wrong. The late timing of Easter this year would be expected to lead to a rise in spending between March and April and the ONS tries to make an allowance for this. But it is not an exact science, which is why the monthly movements in retail sales often look quite dramatic. April’s big rise followed a 1.4% fall between February and March.
The weather also has an impact, particularly for certain sectors of retailing. April was a relatively warm month, which tends to increase footfall in the high street. Garden centres seem to have done especially well.
A less benign explanation is that consumers are either ignoring the squeeze on their real incomes or are oblivious to it. If so, expect to see an increase in consumer debt over the coming months.
This, though, does not square with what happened in the first few months of 2017, when consumers did seem to be tightening their belts after spending freely in the second half of 2016. Despite record levels of employment and ultra-low interest rates, there was a marked slowdown in retail activity.
All of which suggests that the April increase in retail sales should be treated with some caution. The ONS always suggests that looking at retail sales over the latest three months is a better guide to what’s happening than a single month’s data, and that advice is particularly apposite here.
Between the three months ending in January and the three months ending in April, retail sales volumes rose by 0.3%. That looks about right and fits with the general picture of an economy that is not about to plunge into recession but is not exactly firing on all cylinders either.
By Larry Elliott
