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May retail sales bounce back as economy reverses lockdown collapse

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19/06/2020
Retail sales in the month to May increased 12% from the record falls in April, official statistics reveal.

Despite the increase in May, retail sales volumes were still down 13.1% from the February figure before the full impact of the coronavirus lockdown stalled the economy.

When compared with the same month a year earlier, value sales fell by 14.2%.

And based on quarterly volumes, retails sales decreased by a record 12.8%, with declines across all stores except food and non-store retailing. The value of sales also slumped 14.1% during this time.

The Office for National Statistics (ONS) revealed that non-food stores provided the largest positive contribution to May’s growth, with a 42% uplift in household goods store sales as hardware and DIY branches opened their doors.

Online sales soared to 33.4%, up from the previous high of 30.8% in April.

The ONS said fuel sales also enjoyed a strong increase in the month, but they still remain 42.5% lower than February 2020 ahead of restrictions implemented amid the pandemic.

Paul Dales, chief UK economist at Capital Economics, said the strong rebound in retail sales in May shows that the economy has started to reverse the lockdown-induced collapse in activity faster than expected.

However, with online sales booming, the recovery in physical shops was less impressive.

He said: “Sales rebounded strongly in all categories except food (-0.3% month-on-month). This means despite non-essential retailers not opening until mid-June, around half of the 23% month-on-month fall has already been reversed and sales are now ‘only’ 13.1% m/m lower than in February.

“Overall, these data are an encouraging sign that the economy is rebounding faster than we had expected and suggest that, although GDP has already fallen by 25%, the contraction in activity in Q2 as a whole won’t be as bad as our 23% quarter-on-quarter forecast. Even so, the worst is yet to come for the labour market and the public finances.”

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