Weak retail numbers adds 'death knell' to UK hopes
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Disappointing retail sales for last month have added to fears that the UK will have been unable to pull itself out of recession in the second quarter of the year.
Figures from the Office for National Statistics show retail sales volumes increased by just 0.1 per cent month-on-month during June. This is below expectations and means volumes contracted by 0.7 per cent quarter-on-quarter in the second quarter.
IHS Global Insight chief UK and European economist Howard Archer says the marginal rise in sales was only achieved through earlier and deeper discounting by retailers, especially those in the clothing sector.
Archer adds that bad weather across the month will have dragged on sales, while the Queen’s diamond jubilee celebrations seem to have failed to offer a significant boost.
“Disappointing retail sales in June is another death knell for already low hopes that the economy avoided a third successive quarter of GDP contraction in the second quarter,” the economist warns.
Capital Economics UK economist Samuel Tombs adds that retail sales could benefit from an uplift in July and August thanks to the Olympic Games being held in London.
However, he adds: “Nonetheless, we continue to think that rising unemployment later this year and households’ focus on paying off their debts are likely to prevent a sustained recovery in consumer spending.”
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