The foreboding offered by sagging consumer sentiment numbers has failed to discount the resilience of the U.K. consumers, who lapped up the opportunity offered by other factors and went about a buying binge. However, economists took the data with a pinch of salt and questioned the sustainability of the good performance.
U.K. retail sales rebounded in July even though consumer sentiment deteriorated notably after the "Brexit" vote in June, official data revealed Thursday.
Retail sales volume, including automotive fuel, climbed 1.4 percent month-on-month in July as warm weather boosted clothing sales and the weak pound encouraged tourists to buy watches and jewelry, the Office for National Statistics said.
The increase in sales volume came in contrast to a 0.9 percent fall seen in June, and was much faster than the expected gain of 0.1 percent.
Likewise, excluding auto fuel, retail sales volume advanced 1.5 percent after decreasing 0.9 percent in the prior month. Economists had expected a mere 0.3 percent increase.
Food sales climbed 0.6 percent and non-food store sales increased 2.4 percent in July.
Better weather this year could be a major factor for improvement, Joe Grice, the chief economic adviser at the ONS said.
There is also anecdotal evidence from respondents suggesting the weaker pound has encouraged overseas visitors to spend, said Grice.
Ruth Gregory at Capital Economics cautioned about reading too much into one month's figures. Nonetheless, the economist said the data provides a tentative sign that consumer spending will prevent GDP growth from deteriorating as much as some surveys have suggested.
IHS Global Insight's Economist Howard Archer said it is possible that retail sales will gain some support again in August from the good weather.
He noted that the prospects for consumer spending are likely to be significantly influenced by whether confidence recovers significantly following its substantial drop after the Brexit vote.
On a yearly basis, growth in overall retail sales improved to 5.9 percent in July from 4.3 percent. Sales excluding auto fuel advanced 5.4 percent, faster than the 3.9 percent rise in June.
Economists had forecast overall sales volume to grow 4.2 percent and sales excluding auto fuel to rise 3.9 percent.
by RTT Staff Writer
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