UK Retail Sales surge in June

The Covid-19 pandemic has brought about all sorts of economic events. Yesterday evening I went for a stroll in Battersea Park and it was quite noticeable how the number of people going for a picnic there has increased. We do not know how permanent that will be but I suspect at least some of it will be as people discover that the same bottle of wine is so much cheaper than at a wine bar or pub. Oh yes and some seem to forget the food part of the picnic! I can see that BBC Breakfast have put their own spin on it.

9-year-old Sky had this message on #BBCBreakfast for people dropping litter in parks and open spaces

Yes more people have created more litter. Kudos to @PolemicPaine who pointed out ahead of a flurry of such media reports that it would happen. Some people’s behaviour is bad but in recent years the cleanliness of Battersea Park has improved a lot and thank you to the workers there.

Retail Sales

These are the numbers which were likely to be harbingers of change in the trajectory of the UK economy. So this morning’s news was rather welcome.

In June 2020, the volume of retail sales increased by 13.9% when compared with May 2020 as non-food and fuel stores continue their recovery from the sharp falls experienced since the start of the coronavirus (COVID-19) pandemic.

That was quite a surge and means this.

The two monthly increases in the volume of retail sales in May and June 2020 have brought total sales to a similar level as before the coronavirus pandemic; however, there is a mixed picture in different store types.

There is another way of looking at this.

In June, total retail sales continued to increase to reach similar levels as before the pandemic, with a fall of just 0.6% when compared with February.

So is it in modern language, like well over? Not quite as the text is a little reticent in pointing this out but volumes were some 1.6% lower than last June. Whilst growth had been slowing we usually have some so perhaps 3% lower than we might usually expect. However these are strong numbers in the circumstances and will have come as an especial shock to readers of the Financial Times with the economics editor reporting this. I have highlighted the bit which applies to June.

The latest numbers on card payments and bank account transactions from Fable Data show that in the week to July 19, total spending in the UK was 25 per cent down on the same week in 2019, a deterioration from a 13 per cent decline four weeks earlier.

As you can see whilst consumption is a larger category than Retail Sales there is quite a difference in the numbers here. According to the report by the economics editor of the FT a bad June was followed by a woeful July.

The latest indications from unofficial data on spending patterns in the UK suggests the economic recovery that began in late April has stalled — and possibly even moved backwards in July. Separate figures from the Bank of England’s payment system and from card payments collected by Fable Data show a worse picture for spending in mid-July than at the start of the month.

More on this later.

The Breakdown

Whilst the overall picture is pretty much back to February there have been some ch-ch-changes in the pattern.

In June, while non-food stores and fuel sales show strong monthly growths in the volume of sales at 45.5% and 21.5% respectively, levels have still not recovered from the sharp falls experienced in March and April.

My personal fuel sales shot up as I bought some diesel and went to visit an aunt and my mother;s house at the end of June but on a more serious level traffic in Battersea picked up noticeably. This is in spite of the official effort to discourage driving just after telling people to drive! Anyway switching sectors this is interesting.

Following this peak, sales returned to a level higher than before the pandemic. In June 2020, despite a small monthly decline of 0.1% in volume sales, food stores remained 5.3% higher than in February 2020.

I say that because of this.

Feedback from food retailers had suggested that consumers were panic buying in preparation for the impending lockdown.

If they were we would expect a dip going ahead. On a personal level I did put some extra stuff in my freezer in case I had to quarantine ( it was 7 days then) and bought some more tinned food. But collectively the other side of that has not been seen so far. Maybe it is because the June numbers do not see the opening of restaurants and the like which began on July 4th.

I doubt anyone is going to be surprised by this.

Non-store retailing has reached a new high level in June 2020, with continued growth during the pandemic and a 53.6% increase in volume sales when compared with February 2020.

Let me now give you the two polar opposites starting with the bad.

Textile, clothing and footwear stores show the sharpest decline in total sales at negative 34.9%. This was because of a combination of a large fall within stores at negative 50.8% along with a slower uptake in online sales, with a 26.8% increase from February.

Now the up,up and away.

Household goods stores, as the only store type to show an increase since the start of the pandemic, has a large uptake in online sales, increasing by 103.2%. In addition, household goods stores saw the smallest decline in store sales when compared with other non-food stores, at negative 15.2%.

I am glad to see my friend who has been painting his garage door and some windows pop up in the figures.

In June, electrical household appliances, hardware, paints and glass, and furniture stores all returned to similar levels as before the pandemic.

Comment

This is welcome news for the UK economy and it provides another piece of evidence for one of my themes. For newer readers I argued back in January 2015 that lower prices boost the economy ( the opposite of the Bank of England view) and we see that lower prices in retail have led us to getting right back to where we started from. I am sure that some PhD’s at the Bank of England are being instructed to sufficiently torture the numbers to disprove this already.

Actually the Bank of England is in disarray as in response to the FT data above one of its members seems to have switched to analysing health.

Jonathan Haskel, an external member of the BoE’s Monetary Policy Committee, said the evidence was beginning to show that household concerns about health were more likely to drive spending than government lockdown rules.

Oh well. Also this made me laugh, after all who provided all the liquidity?

“The need for more equity finance creates a case for authorities to be ambitious in reforming the financial system to remove any biases against the patience that’s needed for many equity investments,” he said.

“Even investors who should have the longest horizons seem to have a fetish for liquidity and an aversion to really illiquid growth capital assets.” he said. ( Reuters)

I do hope somebody pointed out to Alex Brazier, the BoE’s Executive Director for Financial Stability Strategy and Risk that the speech should be given to his own colleagues who have been singing along to Elvis Costello.

Pump it up, until you can feel it
Pump it up, when you don’t really need it

Let me finish by pointing out that these retail numbers are imprecise in normal times and will be worse now. So we have seen quite an upwards shift of say around 10%. Moving onto numbers which are even more unreliable there was more good news but regular readers will know to splash some salt around these.

At 57.1 in July, up from 47.7 in June, the headline seasonally
adjusted IHS Markit / CIPS Flash UK Composite Output Index – which is based on approximately 85% of usual monthly replies – registered above the 50.0 no-change value for the first time since February.

24 thoughts on “UK Retail Sales surge in June

  1. Hello Shaun,

    Both myself and freinds have been slowly stock piling again ahead of the 2nd wave and threatened lock down.

    I find the supermarkets shelves are more empty this week , petrol is 108.9 ltr .

    roads very quite this Friday – so I guess those in work have taken a long weekend.

    I note the usual rubbish on reporting the economy – year on year is what we should be interested in , but from Feb. 2020 ?

    We shall see , it’s not nice living in ” interesting times ” …

    Forbin

    • The alleged 2nd wave will come should central banks need to print their next batch of money. (and they will)

      I’ve not cared less about CV19 and have lived as normal a life as possible, more chance of me dying in a car crash driving to the shops than succumbing to this. And certainly more chance of me dying from stress due to the govt party putting me out of work.

      But last night was my last shop for a while due to the introduction of muzzles, as i just won’t wear one as they do sweet FA. So will now for the 1st time in my life do internet shopping.

      As a child i had a Saturday job sweeping up in a huge shot blasting factory to get my beer and cigarette money … i was provided with these masks and they done absolutely nothing to protect me, i’d still be coughing up dust the day later!

      PS I’m now going to do a IRATA rope access course to enhance my work prospects despite for the last decade avoiding doing this due to the dangers. So CV19/Tories have now forced me to work from heights which is the no.1 cause of deaths in the work place. Good of the govt to look out for my life isn’t it.

      Clueless ######s!

      • “The alleged 2nd wave will come should central banks need to print their next batch of money. (and they will)”

        Precisely: and that will be the ONLY reason.

        • for the reader,

          a face mask made from your old T-Shirt offers the same protection against viruses as does painting your windows white does against a thermo nuclear blast.

          1, HEPA filter – 2.5 PM or less
          2, change every 30 minutes of use
          3, use gloves to change , then dispose of gloves in a plastic seable bag. fit new gloves.
          4, make sure you are more than 1.0,1.3 , 1.8 or 2 m away from anyone – distance stated from various from country’s health directions .
          5, check wind direction – make sure any persons are up wind from you when changing mask or filter or gloves.
          6, if you need to change filter/mask inside a shop you must leave it and perform the operations.
          7, any items handled must be cleaned before putting back on the shelf. You will need to clean all items once at home , with new gloves , etc ,etc,
          8, wear a full suit as your body continuosly sheds skin cells,hair and other debris – note: you leave a cloud of this stuff as you walk through the store – takes about 20 minutes to settle and/or be dispersed to another part of the store via the air-con.

          this is a shortened vertion , there’s about 30 steps if you really do want to be clean of SARS-2 or any other bug.

          I’ll leave it to the reader to ponder why now and not at the begining of the pandemic . Also to check on polutions leves and why countries like the Chinese actually wear masks

          You should also bone up on details such a viral load needed to infect too.

          and if you have a cough,sneeze or temprature – why are you out shopping any way ?

          Forbin

          • for the down tickers

            facts matter – not feelings

            I am data driven – look these things up yer self

            and enjoy the weekend , have some popcorn

          • “The science” told us they don’t work, and “the science” cannot be changed, as “the science” is absolute.

            A simple test would be to take a drag of a vape cigarette, then blow it out with a paper face mask on … then see how far and wide ones breath spreads.

            But we live in a nation of people whose biggest danger is getting a paper cut hence why people on here think they work.

          • Science is not absolute, it reflects the data we have about the world around us and if that data changes then the science may have to change to explain it.
            The initial arguments against wearing (non-medical grade) masks were:
            – they dont provide great protection to the wearer but people may think they do,
            – there was already a shortage of all levels of PPE for the medical & care services.
            Also the period during which people could be infectious before showing symptoms was still uncertain at that time.
            Further research has shown that wearing a (non-medical) mask reduces the risk of the wearer spreading infection, by over 40%. This is because the virus droplets as breathed out are significantly larger than after they have travelled a short distance and start sub-dividing into smaller drops and finally an aerosol, not a process that applies to cigarette smoke.

  2. June’s figures would have been due to pent up demand from the previous months under house arrest. But unless its predominantly online shopping i cant understand how it could be close pre lockdown levels as the shops i visited then were absolutely dead, can see vast swathes of store closures in the coming 12 months.

    • Hi Arthur

      There have been lots of impacts as for example there was a rice shortage and I remember buying some Asda own brand, basically as a quarantine hedge. Fortunately it is nice rice and I am now using it up.

      Moving to the collective I heard a retail expert saying that people are now shopping less often but buying more. This means that the smaller stores which did well are now seeing a drought whereas the bigger ones are pushing the volumes. All these changes add an extra later of uncertainty to the national figures as well as maybe explaining your experience.

  3. I can make little sense of what you say the figures say about total spend.

    “The latest numbers on card payments and bank account transactions from Fable Data show that in the week to July 19, total spending in the UK was 25 per cent down on the same week in 2019, a deterioration from a 13 per cent decline four weeks earlier.”

    You seemed to say that applied to June but it says July. Anyway, if I am right in assuming that that measures consumer spending LESS cash transactions, and I think we know that cash has undergone a marked decline lately, then the spend cannot be remotely close to what it was before.

    • Hi Peter

      It is the last bit in the quote where we are going back 4 weeks from the 19th of July so taking us back into late June. That does not key with the Retail Sales release.

      As to the transactions by cash and their impact good point. I wonder how that is allowed for?

  4. “A May 2020 evidence review cited by The Lancet – a review of dozens of scientific studies – found:
    ‘The preponderance of evidence indicates that mask wearing reduces the transmissibility per contact by reducing transmission of infected droplets in both laboratory and clinical contexts. Public mask wearing is most effective at stopping spread of the virus when compliance is high. The decreased transmissibility could substantially reduce the death toll and economic impact while the cost of the intervention is low. Thus we recommend the adoption of public cloth mask wearing, as an effective form of source control, in conjunction with existing hygiene, distancing, and contact tracing strategies. We recommend that public officials and governments strongly encourage the use of widespread face masks in public, including the use of appropriate regulation.’”
    https://www.medialens.org/2020/conspiracy-theories-malign-and-benign-face-masks-and-israeli-training-of-us-police/

    • Hi postkey

      The Lancet has not had a good pandemic sadly both for it and us. However I think one can take both your and Forbin’s point. They may be far from perfect especially how they are used but still do some good.

  5. I have a relative who is a police forensic scientist and her comment is that ANY kind of face covering dramatically reduces DNA contamination and that a proper mask will stop almost all of it. Obviously forensic masks are ppe3 grade but lower grades are still very effective. If DNA transmission is vastly reduced ( I.e what you breath out and tiny droplets of spittle) then the amount of virus you could transmit or inhale is also dramatically reduced or avoided altogether. This is not just theoretical but laboratory tested. That’s good enough for me

    • Hi Pavlaki

      I wore one earlier on those grounds. That they do some good but I also take Forbin’s point that they need to be used properly and thoroughly to be fully effective. Today’s take up at the supermarket was ~80%.

    • Pavlaki: That’s akin to saying that since I cannot breathe out tennis balls if I have a tennis racket in front of my face, I cannot breathe out rice either.

    • If you wish to wear a mask that is your choice, but this totalitarian govt. should not be enforcing it on us people who have an ability to think for ourselves.

  6. I think the surprise rise in June sales figures could be partly down to ‘availability of goods’. Manufacturing, production and distribution has to return before demand is satisfied. That could be what has been happening as many items simply weren’t available for a period as the supply chain buckled. In fact, I seem to recall the BoE lamenting they had trouble creating their price indexes because so many items in the basket were not available for a reliable price, so they imputed them (aka made them up).

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