U.K. Retail Sales Bounce Back in April as Weather Warms Up
(Bloomberg) -- U.K. retail sales rebounded more than expected in April as the spring weather lured shoppers into stores.
Sales climbed 1.6 percent from March, compared with a median estimate of a 0.9 percent gain in a Bloomberg survey. The surge was led by fuel, household goods and clothing, according to data from the Office for National Statistics in London.
After cold weather hit sales at the start of the year, the Bank of England is looking out for a recovery in consumption as it debates when to next raise interest rates. Britons are just now emerging from a year of shrinking real incomes after the vote to leave the European Union battered the pound and stoked inflation.
The pound climbed after the report, rising 0.5 percent to $1.3409 as of 9:36 a.m. in London.
Some stores reported that the weather had made a difference in April in getting people back into the shops, the ONS said. Clothing retailer Next Plc said this month that sales surged amid warm weather and it raised its full-year profit forecast.
Despite the bounceback in April, the longer-term trend is more subdued. Over three months, sales gained 0.1 percent from the previous period, the ONS said. Combined sales in April and March increased 1.3 percent from a year earlier, compared with a 2.9 percent pickup a year ago.
“Over the longer-term, retail sales growth has slowed considerably, with increases in food, household goods and internet retailers being largely offset by declines across all other types of retailing,” said Rob Kent-Smith, head of national accounts at the ONS.
That trend has hurt Marks & Spencer Group Plc, the 134-year-old retail chain that’s a fixture of shopping districts, which is shutting a third of its large stores. Halfords Group Plc, the car-parts and bicycling retailer, said this week that profit probably won’t grow this year.
From a year ago, retail sales increased 1.4 percent in April. Excluding fuel, annual growth was 1.5 percent.
The BOE expects household spending to pick up, but not enough to prevent economic growth from slowing markedly in 2018. Economists and investors nevertheless see about a 50 percent chance of an interest-rate hike this year after the first increase in a decade last November.
©2018 Bloomberg L.P.