Retailers edge ahead despite rain
Thursday 19 July 2012
Retailers scraped growth last month as a promotion-led boost for clothing stores was overshadowed by a weather-hit performance from food outlets.
Retail sales volumes edged 0.1% higher between May and June, the Office for National Statistics (ONS) said, which fell far short of City expectations of 0.6% growth.
The figures came as a number of retailers revealed a difficult summer, with Mothercare, JJB Sports and Halfords all revealing dismal results.
The wettest June on record since 1910 was behind a 0.7% drop in food sales last month, the ONS said, while clothing retailers saw sales jump 2.5% as they brought forward their summer sales.
The impact of discounting and slowing inflation was seen in the 0.5% drop in retail sales values between May and June.
Against expectations, the Queen's Diamond Jubilee celebrations proved to be a damp squib for retailers as the ONS said it did not have a "significant impact" on sales.
The weak performance in retail will dash any hopes that the economy might have emerged from its double-dip recession in the second quarter, ahead of official growth figures next week.
The economy entered a technical recession in the first quarter of the year, with gross domestic product declining 0.2%, following a 0.3% drop in the final quarter of last year.
The retail sector forms part of the powerhouse services industry, which accounts for 75% of the total economy in the UK.
The impact of the weather on food sales was reflected in inflation figures earlier this week, which showed the torrential rainfall had weighed on food retailers pricing power.
Elsewhere, department stores saw 0.2% growth in the period, while household goods stores grew by 0.3%.
The ONS reported 1.4% growth in so-called other stores, which covers a broad range of retailers, but was driven by sales in sporting goods and toys.
The total spent in the five-week period to June 30 was £32.7 million, which compares to £26.4 billion in the four weeks to May 26.
Internet sales continued to grow, rising 14.3% to £493.3 million, and accounted for 8.5% of all retail sales values.
Some economists had expected the Diamond Jubilee to lift retail sales with consumers buying food and drink for street parties, purchasing souvenirs, and taking advantage of the extra bank holiday to go to the shops.
Earlier, retail chain Halfords said chief executive David Wild had stepped down as the group warned over profits following a hefty slide in sales, while JJB Sports is to seek another round of rescue funds after seeing its turnaround hopes derailed by poor summer trading.
Samuel Tombs, UK economist at Capital Economics, said: "June's small rise in UK retail sales volumes suggests that the Queen's Jubilee provided only a negligible fillip to spending."
He added: "Particularly striking was the 0.7% fall in food sales - a sector which anecdotal evidence suggested had been boosted by the extra public holiday."
He went on: "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."
Richard Lowe, head of retail and wholesale at Barclays, said: "Most households are benefiting from the recent drop in inflation, including petrol prices, and although the weather has been less than ideal, consumers have spent more time indoors than out which has helped to boost sales of household goods."
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
- 3 Lego breaks out of the toy box and heads for the gallery
- 4 Vogue under fire for 'Big Booty' article
- 5 Julian Assange and Edward Snowden join piracy mogul Kim Dotcom’s political campaign in New Zealand
Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Jihadi John': MI5 may have identified Isis militant who killed David Haines but options limited
Scottish independence: Police will be on high alert on Friday whatever the result
David Haines beheading: David Cameron says Britain will hunt down Isis 'monsters' shown in video murdering aid worker
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...