| UK retail sales grow strongly in December |
| 20.01.12 12:13 | |
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Retail sales data for December were broadly in line with expectations indicating a reasonably buoyant Christmas, although November data were revised down. Headline retail sales increased by 0.6% m/m (consensus: 0.6%, BarCap: 0.1%) compared with -0.5% m/m in November. December's growth was driven by sales of textiles, automotive fuel and food, while sales of big ticket items and non-store retailing weakened. Core retail sales, which exclude auto fuel, increased by 0.6% from -0.8% in November (consensus: 0.7%, BarCap: 0.1%). Nominal sales were also strong with both the headline and core measures increasing by 0.8% m/m from -0.4% and -0.9% previously. However, the less volatile 3m/3m measure of core nominal sales eased to 1.3% from 1.6% meaning that the gap between real and nominal sales narrowed in December (see chart). Anecdotal evidence indicates there was heavy discounting towards the end of the month, especially in textiles. To the extent that this was a one-off event, we would expect this narrowing to be temporary and the gap between nominal and real spending to be sustained. Today's data indicate that trading during the Christmas period was not as bad as retailers feared, although some heavy discounting towards the end of the month would have helped these volumes figures. However, we do not think this pace of increase will be sustained in the coming months given the cautious mood of British consumers and the fact that they are experiencing the most severe real income squeeze in decades. We expect consumer spending to remain subdued at the beginning of this year and to gradually gain momentum towards the end of the year as inflation abates and the squeeze on real earnings eases. source: BarCap |
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