Retail sales beat expectations for April, sending sterling higher
In contrast, expectations pegged retail sales growth at 0.8% for the month. However, on a three-month on three-month basis, the quantity of goods bought “remained relatively flat at 0.1%”.
Petrol sales reported the largest recovery in April, with growth of 4.7% compared with a 6.9% fall in the previous month.
But department stores was the only sector to report a fall in sales (-0.9%) in April following strong growth in March.
Online sales continued to grow year-on-year at 17.3% in April 2018, in comparison with 16.1% in April 2017; with food and clothing stores seeing record sales.
Off the back of the positive retail numbers, sterling gained around a third of a cent this morning.
‘2018 – an unremarkable year for the UK economy’
Ben Brettell, senior economist at Hargreaves Lansdown, said today’s data is a welcome bit of good news for the UK economy following some disappointing data over the past few weeks.
But, he added that the underlying trend for retail sales is still “pretty lacklustre”, with longer-term growth slowing markedly.
“Sales have been creeping up at high street retailers, but that’s been achieved by slashing margins and profits are suffering as a result. Online competition is a long-term headwind, and established retailers are still struggling for a response.
“Overall 2018 looks set to be an unremarkable year for the UK economy. Growth is anaemic at best, and retail sales look insipid. But with inflation falling back towards target and real wages finally growing, albeit only slowly, there’s little cause for alarm either.”
Brettell added this should mean little imperative for the Bank of England to raise interest rates.
“Markets are currently pricing in around a 40% chance of a rate rise in August, and a 60% chance of higher rates by the end of the year. Personally I don’t see the justification for higher rates at present – other than to provide more firepower to cut once more when the next downturn inevitably hits,” he said.