Global| Mar 26 2009UK Retail Sales Fall But Trend Holds Up
Summary
If there is an enigmatic economy right now it is the UK’s. The central bank is very worried about deflation and economic weakness. Yet the last retail prices report showed inflation up sharply and the core rate stubborn. While surveys [...]
If there is an enigmatic economy right now it is the UK’s. The
central bank is very worried about deflation and economic weakness. Yet
the last retail prices report showed inflation up sharply and the core
rate stubborn. While surveys of consumer activity and measures of
confidence are weak, Yr/Yr real retail sales excluding autos are up a
very solid and strong 5.6% and two months into the quarter they are up
at a 5.9% pace.
Still, in February, retail sales fell by 1% in nominal terms
and 1.9% in real terms (ex autos).
Retail sales have fallen in seven of the last 12 months. They
are down in four of the last six months and have risen in only one of
the last six months- hardly a picture of strength. The 1.5% rise in
nominal sales in January is an important factor keeping the current
growth rates firm. Just to complicated things, ex auto real retail
sales are up in Three of the past six months as well as in three of the
past four months.
This strength in ex-auto sales is surprising. The UK economy
is suffering though severe financial problems as is the US. Sentiment
is down strongly. But the inflation figures do not want to settle down
and consumer spending simply finds ways to stay alive despite some
sputtering. It is hard to get a grip on the UK economy because of these
divergences. The inability of the government to sell as many bonds as
it tried to auction yesterday is another sign of unmoored expectations.
Inventors are having a hard time getting a grip on the economy and that
makes it hard for them to make investment decisions. I still think
weakness will enfold this economy and that the moves to stimulate are
the right ones, but for the moment, some unexpected readings of
strength are helping to support UK growth and to confuse investors.
| UK Real and Nominal Retail Sales | Quarter | |||||||
|---|---|---|---|---|---|---|---|---|
| Nominal | Feb-09 | Jan-09 | Dec-08 | 3-MO | 6-MO | 12-MO | Yr Ago | 2-date |
| Retail Total | -1.0% | 1.5% | 0.0% | 2.1% | -0.7% | 0.5% | 4.8% | 4.7% |
| Food Bev & Tobacco | 0.7% | 0.6% | -0.7% | 2.2% | 5.3% | 5.1% | 5.7% | 2.9% |
| Clothing footwear | -3.0% | 5.0% | 1.0% | 11.8% | -4.8% | -1.1% | 3.1% | 19.7% |
| Real | ||||||||
| Retail Ex auto | -1.9% | 0.8% | 1.9% | 3.2% | 0.9% | 0.5% | 5.6% | 5.9% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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