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Economy in Brief

UK Retail Sales Fall And Markets Quiver 
by Robert Brusca June 19, 2009

UK retail sales fell unexpectedly in May and, combined with news of greater public sector borrowing, markets sold off with particular pressure on the pound sterling. The UK has been posting some of the best economic numbers in Europe but with the slippage in retail sales some of that optimism has faded. Still there are upbeat signs in the UK economy.

One sign of optimism is still retail sales themselves. Although the Yr/Yr figures are worsening the six months trends have barely turned lower and three-month trends are sill quite strong and advancing. Perhaps the disappointment is more about markets getting ahead of themselves than about any real disappointment in retail sales trends themselves.

The UK housing market is showing some signs of stirring. Mortgage lending still fell in the recent month (May) but lenders suspect that demand for purchases has been increasing. It is mostly re-mortgaging activity that has been slackening off. It is reported that for every home for sale there are four who are looking to buy according to a survey by the U.K.'s National Association of Estate Agents on Thursday. There are still signs of an upswing in the UK.

The CBI industrial trend survey is still very weak but its index moved up to -51 from -56 in May as well.

On balance the reaction to retail sales may prove to be excessively pessimistic since improving trends still seem to the rule, not the exception, in the UK.

UK Real and Nominal Retail Sales
Nominal May-09 Apr-09 Mar-09 3-Mo 6-Mo 12-Mo Yr Ago Quarter 2-date
Retail Total -0.3% 0.6% 1.2% 6.3% 2.4% -1.1% 6.4% 4.5%
Food Bev & Tobacco 0.6% 0.2% 0.8% 6.6% 4.8% 3.8% 8.3% 7.6%
Clothing footwear -2.3% -1.0% 1.3% -7.9% 1.7% -8.5% 8.5% -9.3%
Retail Ex Auto -0.7% 1.0% 1.2% 6.0% 2.0% -1.7% 6.1% 3.2%
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