UK fashion retail buoyant in April despite slowing economy
The news coming out of the UK retail sector and the wider economy continues to paint a fairly confusing picture with every buoyant report seeming to alternate with a downbeat one. And so it was on Thursday and Friday as data from the Confederation of British Industry and Office for National Statistics left us all scratching our heads and wondering what to make of it all.
First those CBI figures. Its monthly survey showed a surprise lift in retail sales during April, contradicting the general trend for retail growth to stall in recent months.
In its April Distributive Trades Survey, it reported fashion sector strength in particular even though some retailers out there are clearly hurting at the moment. The clothing sector was one of the month’s winners, perhaps boosted by the final appearance of mild, sunny weather, although furniture and carpet retailers saw falling sales for the second month running.
Overall for April, 59% of retailers reported rising sales volumes year-on-year and 21% reported falling volumes. That left a balance of +38%, beating predictions of a +16% balance and managing to be the highest since September 2015’s +49%.
While the late Easter could be argued to have had an effect, the survey was taken before Easter and the overall view was that the increase was above seasonal norms.
And the CBI thinks the bounce might not last with it predicting that May’s sales volume growth will slow down to levels around the average for the time of year.
That view was supported by the latest official ONS data, which on Friday showed the UK economy growing only 0.3% in the first quarter of the year. GDP had grown 0.7% in Q4 2016.
With the services sector accounting for more than three-quarters of economic activity, its 0.5% fall during Q1 was largely responsible for the slowdown. And within services, analysts said that slower retail sales were the main factor behind the decline.
They believe the dip is the start of a sustained tough period for the UK economy and retail in particular, although the CBI’s April survey suggested their pessimism may be misplaced.
But perhaps it isn’t. In such a volatile period, with Brexit talks on the horizon and a general election in just over one month’s time, the one thing analysts are agreed on is that it’s a tough talk to call which way the British economy is going. We may have to wait until we get a few more months and quarters of data before we can tell.
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