UK retail sales rose 1.41% in July
Retail sales in the UK rose 1.41% in July, following a 0.9% decline in June, according to the Office of National Statistics. The rebound was much better than what economists polled by Reuters had forecast, of just a 0.2% increase.
Sales in July were 5.9% higher compared to the same month last year.
The retail sales data follows Wednesday’s labour market report, which showed that the vote to leave the European Union had little immediate impact on British jobs; benefit claims fell by 8,600 in July versus expectations of a 9,500 rise.
Joe Grice, chief economic adviser at the ONS, said: “These are strong numbers showing a pronounced increase in sales compared with last July.
“Better weather this year could be a major factor with sales of clothing and footwear doing particularly well.
“There is also anecdotal evidence from respondents suggesting the weaker pound has encouraged overseas visitors to spend.
“Department stores and specialist retailers like jewellers are among those reporting a good month.”
The ONS said there were signs that the fall in the value of the pound resulted in a surge of luxury purchases made by tourists from overseas – jewellery sales rose 16.6% on the year.
“This positive surprise is encouraging for (third quarter) growth, but with consumer confidence having plunged in the wake of Brexit and business surveys suggesting growing caution, we doubt that it is sustainable,” James Knightley, economist at ING, told Reuters.
“Inflation is starting to rise and will continue to do so due to the steep fall in sterling, meaning that real household income growth will weaken. This is likely to limit retail sales growth in coming quarters.”