These times are ones where the news is often a combination of bad or grim.Indeed the mainstream media seems to be revelling in it. From time to time we do get some better news which I welcome.In the UK version of the pandemic that has regularly come from the retail sales data and this morning is no exception.
In September, we saw growth across all measures. The value of retail sales increased by 1.4% and volume sales by 1.5% when compared with the previous month.
The first point is that we have seen another month of growth which means that the pattern has been of a very strong recovery.
A strong rate of growth is seen in the three-month on three-month growth rate at 17.7% and 17.4% for value and volume sales respectively. This is the biggest quarterly growth seen on record as sales recovered from the low levels experienced earlier in the year.
If course a lot of care is needed because there was quite a previous fall.
In Quarter 2 (Apr to June), the volume of retail sales fell by 9.7%.
The effect of this is that we are now quite a bit above the pre pandemic level of retail sales.
When compared with February 2020’s pre-pandemic level, total retail sales were 3.9% and 5.5% higher in value and volume terms respectively.
Also one of my themes has been in play. Regular readers will recall that I argued back on the 29th of January 2015 that low inflation and indeed falling prices boost retail sales by making them cheaper in real terms, especially relative to wages. If you now look at the numbers again there has been a registered price fall of the order of 1.6% ( the difference between the value and volume figures above) and it has been associated with strong growth. This is bad news for those who argue that we need more inflation such as those setting policy at the Bank of England as they are replying on a “Wages Fairy” that has been absent for more than a decade now.
Breaking it down
The pandemic era seems to have made as hungry.
When compared with February, volume sales within food stores were 3.7% higher in September. Food retailers had suggested that the peak in March 2020 was because of panic buying at the start of the pandemic, and despite seeing a notable fall in sales following this peak, spending remained high. This may be a result of the government tightening restrictions for other services such as bars and restaurants at the end of September, which may have encouraged spending in food stores.
More seriously as the release above suggests there has been a shift here with people eating out less and therefore eating more at home. Unfortunately it is pretty much impossible to quantify. Perhaps some people still have cupboards full of tinned food and freezers full up as well.
There has also been a shift towards online retailing, or more accurately what was already happening got turbocharged.
In September, volume sales within non-store retailing were 36.6% higher than in February. Despite some contraction from the sharp rate of increase in this sector, consumers were still carrying out much of their shopping online when compared with February.
It is a case of what the Black-Eyed Peas would call “Boom! Boom! Boom!”
Despite monthly declines across all sectors except department stores, the proportion of online sales was at 27.5%, compared with the 20.1% reported in February. The proportion of online sales increased across all sectors with food stores nearly doubling their online proportions from 5.4% in February to 10.4% in September.
Putting it another way online sales are up 53% on a year ago.
I guess we should not be surprised that times like these have led to higher sales reflecting people passing the time by gardening and doing some home improvements.
Many retailers selling gardening products commented on increased demand during lockdown as consumers socially distanced in their gardens where possible.Flowers, plants and seeds stores provided strong positive contributions at 0.5 percentage points………Volume sales in household goods stores and “other” non-food stores increased to 11.0% and 10.7% above February, respectively. Feedback from household goods stores had informed us that home improvement sales from DIY and electrical goods stores did well in recent months and helped with the recovery of sales
There should be no great surprise with so many working from home that fuel sales are down.
In September, fuel sales volumes were still 8.6% below February with reduced travel as many continued to work from home, and clothing sales volumes were still 12.7% below February.
But as you can see clothing sales have suffered too. Perhaps a lack of work clothes.O have dome my bit for the October figures by buying a new sweatshirt and some running shorts.
In terms of the overall index we are now at 107.6 with 2018 as the benchmark of 100.
On the other side of the coin this was reported as well.
The GfK Consumer Confidence Index tumbled to -31 in October, its lowest level since late May and down sharply from a nine-month high of -25 in September, as well as being below all forecasts in a Reuters poll of economists. ( Reuters)
It is hard not to laugh at the forecasts.We have had a litany of simply dreadful ones in the pandemic era yet some still seem to have faith in them.As to the numbers October has its issues but I find a survey that is at -25 at a time of record retail sales in September somewhat puzzling.
Today’s Purchasing Managers Index or PMI was also positive. Whilst the reading fell unlike in the Euro area we retained at least some growth.
The pace of UK economic growth slowed in October to
the weakest since the recovery from the national COVID-19
lockdown began. Not surprisingly the weakening is most
pronounced in the hospitality and transport sectors, as firms reported falling demand due to renewed lockdown measures and customers being deterred by worries over rising case numbers.
The growth that we are seeing is to be found here.
Where a rise in output was reported, survey
respondents pointed to factors such as pent up demand in the manufacturing sector, rising residential property transactions and the restart of work on projects that had been delayed at the start of the pandemic.
If we continue with today’s optimistic theme we see that we do have an example of a V-Shaped recovery in the UK economy. This is because retail sales are now a fair bit above pre pandemic levels. So a clear V shape. However this area has been the one which has benefited the most from income being supported by the furlough scheme which ends soon. The replacements are stronger than they were but we may see an impact from the November data. Also there are some extraordinary goings on in Wales which will be affecting retail sales there from tomorrow.
Supermarkets will be unable to sell items like clothes during the 17-day Covid firebreak lockdown in Wales.
First Minister Mark Drakeford said it would be “made clear” to them they are only able to open parts of their business that sell “essential goods”.
Many retailers will be forced to shut but food shops, off-licences and pharmacies can stay open when lockdown begins on Friday at 18:00 BST.
Retailers said they had not been given a definition of what was essential. ( BBC)
Frankly that looks quite a shambles in the making.
So in an echo of the weather as the sun has come out in Battersea we have received some good news today but sadly I suspect the Moody Blues were right about future prospects.
The summer sun is fading as the year grows old
And darker days are drawing near
The winter winds will be much colder