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Economy in Brief

UK Retail Sales in Surprise Rise for Second Month Running
by Robert Brusca September 18, 2008

Ironically even with the second strong month of sales increases the three-month growth rate for retail sales in the UK is plunging. Barometers and surveys of retail sales have been weak, so the rise in each of the past two months was a surprise. Even so the three-month growth rate for sales is getting increasingly weaker (see chart). That points out how uneven the slowing in sales has been. In both August and July sales rose by 0.8%. But that compares to a drop in sales of 3.7% in June and that drop is dominating the three-month change. It now appears as if weakness was front loaded and probably exaggerated in June.

Still the trend for sales is lower. In the quarter to date nominal retail sales are rising at a crawl. Real sales, however, are falling at a -0.2% annual rate in Q3 even with the last two-month rise in sales. There is not much doubt that the UK consumer is under pressure or that these rebounds in sales are not a new trend.

UK Real and Nominal Retail Sales
Nominal Aug-08 Jul-08 Jun-08 3-MO 6-MO 12-MO YrAGo Quarter-
Retail Total 0.8% 0.8% -3.7% -7.9% 2.6% 4.1% 3.5% 0.5%
Food, Beverages & Tobacco 0.1% 0.7% -2.4% -6.0% 3.9% 5.6% 3.9% 2.4%
Clothing footwear 3.7% 3.3% -8.4% -7.2% 5.0% 6.1% 3.0% 11.6%
Retail Ex auto 1.2% 0.9% -4.2% -8.1% 1.9% 3.4% 4.5% -0.2%
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