Panoramic view of a kiosk near Charing Cross station in London, UK on January 20, 2024. (Photo: Alberto Pezzali/NurPhoto via Getty Images)
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LONDON – Stronger-than-expected January retail sales on Friday provided a glimmer of hope for the struggling British economy and suggested the country’s recession will be short-lived, some economists said.
Sales rebounded 3.4% from December. According to data from the National Bureau of Statistics, the strongest monthly gain since April 2021. Economists polled by Reuters had expected growth of a more modest 1.5%.
Sales increased in all areas except closures, with the biggest increase seen at food stores. The Office for National Statistics said consumers “spent more and spent less in January”, with their total payments increasing by 3.9%.
The latest data released on Thursday showed that the British economy entered a technical recession in the final quarter of 2023. Gross domestic product fell 0.3% after contracting 0.1% in the third quarter.
Sales during the key holiday trading period were much weaker than expected, with December posting the biggest monthly drop since January 2021.
At the same time, data from the Office for National Statistics (ONS) show that since February 2020, UK retail sales are still 1.3% below pre-epidemic levels.
“The strong pickup in sales suggests the worst is over for retail, with lower inflation and rising wages setting the stage for a recovery in 2024,” Capital Economics assistant economist Joe Maher said in a report. Provide a strong platform.”
Maher said the rate hike also showed that the drag on consumer spending from higher rates and the economy moving out of recession territory was waning, but “it’s still a long way for retailers to get back to their pre-pandemic highs.” Gotta go”.
Chris Harmer, insights director at the British Retail Consortium, said two months of sales growth in the past three months was “promising” after 19 months of decline.
“Nevertheless, shoppers remain cautious as the cost of living enters its third year,” Hammer said, adding that rising business rates and the cost of new border controls would put pressure on the retail sector.
Kallum Pickering, senior economist at Berenberg, said that despite the poor growth data, the retail sales report, solid inflation data and a healthy December jobs report ended with “half “Positive note” to end the week.
He said anecdotal evidence from retailers suggested consumers were hesitant in December but benefited substantially from January sales.
“However, we need to remain cautious. Monthly data is volatile. January’s growth only offset the sharp 3.3% decline in December (mom-on-quarter decline), so actual sales returned to November levels,” Pickering said in a note expressed in.
He added that the new data was consistent with a “chance pause” in retail sales and broader economic activity over the past 18 months, but Berenberg economists expected retail momentum to continue due to improvements in real wages and consumer confidence. to pick up in the coming months.
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