UK retail sales pick up in June
By Michele Maatouk
Date: Thursday 18 Jul 2019
(Sharecast News) - UK retail sales picked up in June, according to data released by the Office for National Statistics on Thursday.
Retail sales rose 1% on the month in June, comfortably beating consensus expectations for a 0.3% decline and compared to a 0.6% drop in May. On the year, sales grew 3.8%, up from 2.2% in May and better than expectations for a 2.6% increase.
In the three months to June, sales were up 0.7%, with growth across all sectors except food stores and department stores. Still, this was a slowdown from the 1.6% growth seen in the previous three-month period.
Online sales as a proportion of all retailing fell to 18.9% in June from 19.3% in May.
ONS head of retail sales Rhian Murphy said: "Retail sales growth slowed in the latest three months as food stores saw falling sales for the first time this year and department stores continued their steady decline.
"However, retail as a whole saw a return to growth in the month of June, mainly due to growth in non-food stores with increased sales in second hand goods, including charity shops and antiques."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the figures are a timely reminder that consumers aren't being haunted by the possibility of a no-deal Brexit, but are happy to spend the proceeds from rising growth in the real wages.
"June's increase in sales wasn't flagged by any of the surveys, partly because sales in the 'other stores' category- mainly consisting of small, independent retailers- jumped by 3.2%. Nonetheless, sales volumes rose in all of the main sectors except department stores, which are being squeezed by the shift in spending online. Overall, the 0.7% quarter-on-quarter increase in sales volumes in Q2 is a strong result, following the 1.5% increase in Q1.
"Looking ahead, retail sales should retain their recent momentum. Wage growth hit an 11-year high in May, business surveys suggest the dip in employee numbers in the three months to May was just a blip and mortgage rates are set to fall modestly, thereby freeing up disposable income for homeowners when they refinance their loans."
Paul Dales, chief UK economist at Capital Economics, said the rebound in retail sales volumes in June is "a big relief and shows that there is some life in households yet". It also suggests that the overall economy may have avoided a contraction in Q2, he said.
He pointed out that the rise in June more than reversed the declines in April and May.
"This is particularly good news for three reasons. First, it suggests that the weakness in April and May was just a temporary payback from the strength in Q1 rather than the start of a much weaker underlying trend. Second, it's the first monthly activity indicator to turn up after the weak run in recent months. Third, it suggests that the 0.5% q/q rise in Q1 GDP may be followed by no change in Q2 rather than the 0.1% q/q contraction we previously expected."
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