British Retail Sales And How They Affect The Economy

Shopping figRetail sales is perhaps the most significant link to the economy in the UK right at this moment.  The summer months were crucial for retailers as they looked forward to the impact of future sales to continue increasing.  British retail sales maintained status quo during the spring season, even reported earnings above normal.  Subsequently, the month of April was progressive.  Nevertheless, the numbers start to take a turn downward in the months to come.  British retailers withstood a fall from +51 (May) to +29 in June as people bought less clothes.  The food market played a significant role in the decline as well.

Retail sales cover a huge portion of the consumer dollar and investors use this indicator to gauge much of the economic growth.  The drop in May was expected, but so was the June report.  It was left at 0.4% estimated spending.  Some believe that a rate increase is sure to come mainly due to the spending habits found in sales.

Spending Trend in August

The EUR/USD has been volatile as of late.  Those who spend money in the retail sector didn’t spend as much in August.  The public holiday and the weather contributed to low furniture sales and equipment sales.  The timing of the August bank holiday was unfortunate.  It fell outside the time frame for the market’s survey and inquiries.  Therefore, the recorded number of parents shopping for school clothes dropped as well as new furniture sales, leaving business owners with the expectations of hitting a low in September.

Spending in August was approximately 0.1% higher than last year and sales went up by 1.4%.  At the same time, it has been the smallest increase since April, accompanied by a slight growth in July.  The weather change accounts for an upgrade in wardrobe.  Students and all will need new clothes for the fall and for the winter months.  They will be on the lookout for jackets and boots as well to protect themselves from the weather.

Hopefully, the retailers will see an upward trend with the effects of higher wages upon them.  The outlook is not so bright, especially when you consider that August was there worse month in years.  Currently, it doesn’t look good for the home team.

Biggest slump in years

Truth be told, August was absolutely the worst month for British retailers.  In fact, the expert surveyors have said since the financial crisis in November, 2008.  By tracking sales, economists have a pattern in which to go by.  They had pinpointed a 4.3% drop in sales by the end of August.  This marks the sixth slope of the year.  Markit, a financial data company, showed that Britain recorded slow growth margins over the past two years.  This compares with the economic fails in the US and in China.

With the threat of interest rates rising, and Britain’s inflation just above zero, the Bank of England is not expected to take charge of the interest rate hike until the new year (2016).  All of the retail aspects, housewares, furniture, clothing and natural accommodations were untroubled in August.  Fashion boutiques reported a decrease of almost 6% while housewares were down by 3.3%.  On the other hand, online trading increased by 11%, nonetheless, it was not the height of their sales.  It was not a good year for online sales either.

Those businesses that did take a turn for the better were the restaurants and businesses catering to leisure activities. It was a time that UK consumers concerned themselves with dinning out and spending quality time with family during the holidays or enjoying summer vacations.  To top it off, the British were encouraged to spend more of their euro abroad rather than at home in the UK.

Nonetheless, the weather during the last week of August was terrible.  It was raining and it was cold.   However, on the upside, it did provide some with the motivation to shop for the upcoming seasons, while others stayed at home.  The tourist dollar had slowed tremendously.  Surprisingly though, there was an incline in bicycle sales and cyclists were buying bike parts to repair their mode of transportation, excluding the last week in August.

A Wake Up Call

The numbers are staggering.  It makes business owners take a second look at their market.  Retail analyst reports that the upscale fashion industry was only included in the survey, leaving out the vast majority of independents in the retail industry.

The market is recovering, however, UK consumers continue to increase their spending on leisure rather than in retail.  The number of people who work and spend their euro in the UK continues to grow, but not at a fast past.  The market for housing, furniture and other housewares seems to hold steady.    The economy has started recovering up yet wages remain the same.  The uncertainty of the market for other goods and food sales creates a certain level of fear for those in the UK.