LIVE MARKETS-Sunshine warms UK retail sales, but they still fall short
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SUNSHINE WARMS UK RETAIL SALES, BUT THEY STILL FALL SHORT
UK retail figures for June rose 0.9% and mark a turnaround from May's steep 2.8% fall, but still rung in below expectations for a 1.2% rise, so what's the market chatter?
At Investec, economists say June figures disappointed slightly but some back revisions to earlier months mean the overall picture for Q2 is better than expected.
Along with clothing retailers and supermarkets benefiting from hotter weather, they note commentary by the ONS mentioned promotions online and in department stores.
"We do wonder whether some of this discounting is facilitated by manufacturers within and outside of the UK seeking alternative markets for their products, now that higher tariffs reduce their price competitiveness within the U.S.," the team note - a factor they say policymakers will be keeping an eye on though its early days.
Capital Economics has a gloomier take on the numbers.
"With the housing market still struggling to recover from the stamp duty-induced lull, household goods retailers had a particularly poor month, with sales falling for the second month in a row, by 0.1% m/m," they say, also noting that a small rebound in food sales could be temporary due to the weather.
They also flag GfK consumer confidence index figures published Friday that showed a dip in June.
Jacqui Baker, head of retail at RSM UK said major sporting events in July including the Wimbledon tennis tournament and summer headline concerts led by Beyonce and Oasis mean more outfits were purchased, while the launch of the Nintendo Switch 2 also gave an indicator for an uplift in sales of electrical goods.
But concerns remain, and she said many retailers will be hoping the government will intervene to provide meaningful reductions in business rates, as well as raising the threshold at which employers’ National Insurance becomes payable.
"It’s also hoped that the reintroduction of tax-free shopping is brought back on the table, so the sector doesn’t miss out further on valuable retail spend," Baker says.
(Lucy Raitano)
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