This morning has brought news that we had been expecting to be along sooner or later. After all if you have quite a surge there is a risk of a monthly decline especially in a series which can be erratic in normal times as opposed to the distinctly abnormal ones in which we now live. Thus we arrived at this in the UK.
Retail sales volumes declined by 1.4% between April and May 2021 following a sharp increase in April when retail restrictions were eased;
After all the rise last month was rather dizzying.
Retail sales volumes grew sharply in April 2021 with a monthly increase of 9.2%, reflecting the effect of the easing of coronavirus (COVID-19) restrictions.
We can have a wry smile as you might reasonably think that the purpose of predicting numbers was to be on the case for events like this. However as regular readers are probably expecting that was far from the case.
The monthly drop was unexpected, with economists predicting a 1.6 per cent increase. ( City-AM)
Perhaps they had been reading The Guardian.
UK retail sales surged in May by the most since the Covid-19 pandemic began as shoppers returned to high streets across the country after lockdown measures were relaxed, according to industry figures.
The British Retail Consortium said total sales increased by 10% in May compared with the same month in 2019, before Covid-19 hit consumer spending and tipped the UK into recession.
I have often warned that the British Retail Consortium numbers are a poor guide to the official release and in fact are often actively misleading. Usually they are too low but not this time as we mull whether they were picking up the April surge? We can also look at the breakdown they reported.
After the reopening of non-essential retail and hospitality venues across all four nations of the UK, pent-up demand among lockdown consumers fuelled a sharp rise in spending, with strong growth in furniture sales and homewares, as well as a recovery in clothing and footwear shops.
Clothes shops reported sales growth of more than 100% as going out returned with the opening of indoor hospitality in May.
Actually we were thrown another head fake.
GfK’s long-running Consumer Confidence Index increased six points to -9 in May.
What did happen?
The overall decline hid a mixed pattern. So let us open with the falls.
The strongest monthly declines in sales volumes in May came from food stores and non-store retailers of 5.7% and 4.2% respectively as both sectors were affected by the easing of restrictions for hospitality and non-essential retail.
The food part was probably a switch from this category to a different one.
anecdotal evidence suggests the easing of hospitality restrictions had had an impact on sales as people returned to eating and drinking at locations such as restaurants and bars.
Also there were some more specific changes.
Feedback from retailers suggested that sales were negatively affected in May by both the reopening of all retail sectors and the relaxation of hospitality restrictions, with specialist retailers of alcoholic drinks and tobacco reporting a monthly decline of 8.4%.
On the other side of the coin there was this.
Non-food stores reported a 2.3% increase in monthly sales volumes in May 2021 with household goods stores (for example, hardware and furniture stores) and “other” non-food stores reporting the largest growth of 9.0% and 7.7% respectively……. anecdotal evidence from retailers suggested increased spending on outdoor garden furniture in preparation for the summer and the relaxation of social gathering rules.
So we do at least have something which correlates with the BRC report which is household goods. However there was certainly no surge in clothing sales.
Clothing and department stores both reported monthly declines of 2.5% and 6.7% respectively.
There was a signal of the re-opening of the economy from fuel sales.
Automotive fuel sales grew by 6.2% when compared with the previous month, continuing the recovery witnessed in April (growth of 10.6%) as the relaxation of lockdown measures increased people’s travel.
But numbers are still lower.
However, sales continue to remain 4.3% lower than February 2020 before the impact of the pandemic.
One factor here that may be flattering fuel sales is a likely switch from public to private transport and hence a push to fuel sales. Tube journeys in London are still heavily down and in an irony they are just about to arrive in my area Battersea.
Here was something that could not be described as unexpected as shops reopened.
Online spending values decreased in May 2021 by 5.7% when compared with April 2021, with all sectors reporting monthly falls in their online sales
But if we look back to past levels for this area ( around 19%) it does look like that has been quite a large upwards shift even allowing for some of it to fade away.
This resulted in a decline in the proportion of retail spending online values which fell to 28.5% from 29.8% in April 2021.
It looks as though there is little, if any relief for the downwards trend for the high street.
The value of retail sales online in May 2021 was 58.8% higher than in February 2020, whereas the value of retail sales in store in May 2021 was 1.3% lower than in February 2020.
There are several ways of doing this and this is not it.
Retail sales volumes in May 2021 were 24.6% higher than in May 2020,
We can however compare with what we consider to have been past normal levels.
over April and May combined, average total retail sales volumes were still 7.7% higher than in March 2021, and were 9.1% higher than in February 2020 before the impact of the coronavirus (COVID-19) pandemic.
Also the last three months helps with identifying a trend.
The large increase in sales volumes in April, followed by a relatively small fall in May, has resulted in the volume of sales for the three months to May 2021 being 8.3% higher than in the previous three months; there was strong growth in automotive fuel sales and non-food retailers of 19.3% and 17.8% respectively.
I think we should take the opportunity to remind ourselves of what we were told on Tuesday.
Average total pay growth for April 2021 compared with April 2020 was 8.4% for total pay and 7.3% for regular pay which feeds into the strong 5.6% average growth for February to April 2021.
Looking at levels before the coronavirus pandemic we can compare April 2021 with April 2019 where average total pay growth was 7.1%,
So people have had a surge in wages but have not spent it? That is very much against the usual British pattern. So we get a reminder that a little humility is required with the figures. Of course there was a strong rise in April to allow for too.
As to the scale of the May fall a fair bit of it will no doubt be collected in another category via a switch from food sales to restaurants and bars. As they charge more it may even end up as a boost to economic output and GDP. Also we can make a nod to tonight’s fixture between England and Scotland because it may be in play in the June numbers according to City-AM.
Alcohol sales in the UK have skyrocketed during the Euros, as sunny weather spurred fans to splash the cash on booze, according to data from PayPoint.
Sales data from PayPoint’s network of 28,000 retailers found that over the weekend the Three Lions played their first fixture against Croatia, alcohol sales climbed 11 per cent in Britain.
Not just south of the border.
Meanwhile, north of the border in Scotland, sales rose 6 per cent – with the tipple of choice being Tennent’s Lager, which enjoyed an 18 per cent boost, Dragon Soop (16 per cent) and Buckfast (13 per cent)
Although the weather in London today (heavy rain so far) is not helping much