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Livesquawk - Retail Sales Buoyed By Early Christmas Shoppers, Stockpiling Ahead Of October Restrictions
Retail Sales Buoyed By Early Christmas Shoppers, Stockpiling Ahead Of October Restrictions

By Harry Daniels

LiveSquawk News  



20 November 2020 / 11.00 GMT  


London – Official numbers from the Office for National Statistics showed a sixth consecutive month of gains for UK retail sales in October, with evidence suggesting that households were already shopping ahead of the holiday season and the latest UK lockdown.  


On the month, headline retail sales volumes rose 1.2% in October, outstripping estimates of a -0.3% drop but short of the 1.4% September figure. Sales rose by 5.8% year-on-year, higher than the 4.1% expected and last month’s 4.6% print.   


Sales excluding auto fuels also surprised to the upside with a 1.3% rise on the month versus an expected flat reading. Annual activity increased 7.8% from a 5.9% forecast and 6.4% print previously.  

ONS’ Deputy National Statistician for Economic Statistics Jonathan Athow said, “Feedback from shops suggested some consumers may have brought forward their Christmas shopping, ahead of potential further restrictions. Online stores also saw strong sales, boosted by widespread offers.”  


Sales are now above pre-pandemic levels, with value and volume sales 5.2% and 6.7% higher respectively than in February, which was before the Covid-19 lockdown restrictions were applied in the UK.  


Underlying sales numbers were also encouraging, the office said. In the three months to October, value sales increased 9.2% and volume sales were up 8.9% compared with the previous three months.    


James Smith, developed markets economist at ING, said, “The lockdown across England, coupled with stricter restrictions across the remainder of the UK, has put a serious dent in what has been a remarkable recovery for UK retail. Unlike the wider economy, which remains 8% below its pre-virus size, the retail sector returned to ‘normal’ spending levels in weeks.”  


There is no doubt sales have been the standout sector in the UK’s recovery following the initial national lockdown in Spring, but analysts worry that British consumers are now starting to suffer fatigue.   


A mixture of a no-deal Brexit, rising Covid-19 infections and the subsequent restrictions as well as employment concerns are all starting to weigh on sentiment. Recent consumer confidence data were at their lowest levels since spring. Survey data compiled by GfK fell to -33 in November, down from the -31 recorded last month.  


Smith said, “Lockdown will inevitably hit retail hard with most shops forced to close again. But there are some reasons to think the sector will recover fairly quickly, albeit with a heavy divergence between online retailers and the high street”  


Unprecedented Levels Of Public Borrowing

Media reports on Friday said UK Finance Minister Rishi Sunak is set to squeeze public sector pay for millions of workers in an effort to curb government spending. The announcement is expected to come during the latest spending review scheduled for Wednesday 25 November. The Centre for Policy Studies, a conservative thinktank, predicted that a three-year pay freeze for all public sector employees (bar health workers) would save GBP15.3bln. 


The ONS also released the latest borrowing data for the UK on Friday. Public sector net borrowing excluding banks (or PSNB ex) was GBP22.3bln last month, the highest October borrowing on record and GBP10.8bln above year-ago figures.  


The report estimated PSNB ex in the first seven months of this financial year (April to October) at GBP214.9bln, GBP169.1bln more than in the same period last year and the highest public sector borrowing in any April to October period since records began in 1993.