Howard Archer, UK economist at IHS Global Insight
Unchanged retail sales in September reinforces suspicion that consumers still need significant encouragement, such as particularly attractive offers or good weather, to put their hands in their pockets and spend.
It is possible that retail sales were hit to a limited extent in September by people spending more on cars to take advantage of the combination of the change in registration and the scrappage scheme.
Even though low mortgage payments, reduced utility bills and easing inflation are boosting the purchasing power of a good many people, the fact is that consumers continue to face serious obstacles that are likely to limit spending for some time and, hence, the upside for growth. These notably include high and rising unemployment, low earnings growth and heightened debt levels. Furthermore, many consumers are keen to limit their expenditure due to still serious concerns about the economy and their jobs, as well as the need/desire to improve their personal finances.
Richard McGuire, fixed income strategist at RBC Capital Markets
High-street sales appear not to be responding to the recent notable jump in consumer confidence, perhaps reflecting the fact that mounting job insecurity and an ongoing credit drought is offsetting the feelgood factors in the form of rising asset values (equities and housing).
The fact that consumers seem not to be putting their money where their mouths are also casts some added doubt over the strength of the nascent recovery, as is also reflected in the downside risk to tomorrow’s GDP number implied by this release.
Vicky Redwood, UK economist at Capital Economics
September’s official UK retail sales figures are surprisingly weak given the strong rise in the timelier CBI and BRC surveys. Sales volumes were flat on the month (consensus +0.5%), meaning they have stagnated for two months. Non-food sales were also unchanged – and have fallen over the past two months. Clothing sales were weakest, dropping by 0.5% m/m. Overall sales in Q3 as a whole still rose by a decent 0.9%. But this was only marginally stronger than Q2′s 0.8% increase, suggesting that retail won’t have contributed to the likely improvement in overall GDP growth in Q3.
Meanwhile, the outlook for sales remains pretty weak in the light of the looming fiscal squeeze and continued weakness of bank lending. Note, too, that October’s Trends in Lending Report from the Bank of England showed that mortgage approvals by the major UK lenders were unchanged in September, supporting our view that the recovery in house prices will soon run out of steam.
Have you read?:
- Retail Sales Growth At Six-Year High
- Retail sales stay flat as shoppers hold back on spending
- Retail Sales Slump As Heavy Snow Keeps Shoppers At Home
- Shock Fall In UK Retail Sales Adds To Fears Of Double-Dip Recession
- Consumer caution prompts only small rise in high-street spending and big drop in new car sales
- Stagnant Retail Sales And Falling House Prices Add To Business Gloom
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