Could this be signs of recovery at last for the UK retail sector? Or a simple-pre-Christmas retail sales boost? The latest figures suggest that UK retail sales increased 0.3 percent during the month of November, with clothing, shoe and textile sales up 3.8 percent from October – according to reports released this week by the Office for National Statistics (ONS). But we’re not out of the woods yet – as the ONS also released revised sales figures for the month of October which showed a drop of 0.9 percent, indicating that despite the early signs of recovery in the British economy consumers are still being very cautious with their spending as they have been hit by wave after wave of recession gloom, cuts and economic ‘double dips’.
Prior to the release of these figures economists had predicted that consumers would spend less during the 2013 Christmas period and hold fire on their spending until the last few days of sales – with the hope of getting better value for money when buying gifts. A survey by the Confederation of British Industry predicted retail sales to increase during the second half of December in the days running up to Christmas, after a weak October and November. With one in four British shoppers getting into debt to pay for Christmas it is understandable that they might be more cautious and think more carefully before making purchases.
Despite the enticing Christmas window displays described in our earlier posts, increasing numbers of shoppers are choosing to stay at home and shop online – data from the ONS confirms that this November online sales reached a record high of 11.9 percent of total sales (not including fuel sales). This increase appeared to correlate with a drop in department store sales which declined 3.1 percent last month.
Analysts at Capital Economics such as Martin Beck believe that November’s increase may be insufficient to secure another quarterly growth in sales volumes in the fourth quarter:
“The foundations for a sustainable rise in spending should be stronger in 2014, with real earnings on course to start growing again and employment continuing to rise. For now, though, consumers are still spending fairly cautiously.”
We’ll be interested to see the figures in the new year to see if this trend continues and hope that there is as much light at the end of the tunnel as Martin Beck suggests.