UK retail sales unexpectedly fall as economy slows
The amount of goods sold in UK shops unexpectedly fell in October, official figures have shown, in the latest sign that the economy is slowing.
The weak performance will be a concern to retailers as the sector heads towards Christmas, especially given that the period covered Halloween, a traditionally busy time for shops.
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UK retail sales dropped 0.1 per cent last month compared to September, when sales stagnated, the Office for National Statistics (ONS) said. Economists had been expecting a 0.2 per cent increase.
In the three months to October, retail sales grew 0.2 per cent compared with the previous three months, the lowest growth since April 2018.
“This morning’s retail sales figures – which once again show households cautious in their spending – suggest it could be a long, hard winter,” said Ed Monk, associate director at Fidelity. “The sales periods around Black Friday and Christmas will, once again, prove crucial.”
A series of data releases this week have showed that the UK economy is losing momentum. Economic growth fell to its slowest annual rate in nearly a decade in the third quarter, while the employment market shed 58,000 jobs.
Consumer spending has been a strong point in 2019 while business investment and manufacturing have suffered under Brexit uncertainty. Today’s figures indicate it is slowing, however.
Thomas Pugh, UK economist at Capital Economics, said: “At least some of last month’s weakness may reflect the recent weakness in the labour market with fewer people in employment and wage growth slowing.”
Monk said the upcoming General Election – the first in winter since 1923 – “is likely to prompt further caution amongst spenders”.
Lynda Petherick, UK head of retail at Accenture, said: “These latest ONS figures are symptomatic of the challenges facing the retail sector after a year fraught with uncertainty.”
Online sales continued to grow as a proportion of all retailing. They increased to 19.2 per cent in October from 19 per cent in September.
Meanwhile, department stores reported their strongest month-on-month growth this year, with the quantity of goods bought increasing two per cent. Fuel sales were also a bright spot, growing 1.5 per cent month on month.
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However, excluding the volatile category of fuel, overall sales fell by an even sharper 0.3 per cent month on month.
Pugh said: “Overall, it is increasingly clear that the risks to our forecast for GDP growth of 0.2 per cent quarter on quarter in the fourth quarter appear on the downside.”
(Image credit: Getty)