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UK Retail Sales Growth Weakest Since April 2018 Before Black Friday

Published on Dec 19 2019 10:20 AM in Retail tagged: Trending Posts / Black Friday / Brexit / UK Retail Sales / Office of National Statistics

UK Retail Sales Growth Weakest Since April 2018 Before Black Friday

British retail sales slowed to their weakest annual growth rate since April 2018 last month, as shoppers continued to keep a tight grip on spending amid uncertainty about Brexit and December's election.

Adjusted for changes in the timing of Black Friday sales promotions, retail volumes growth dropped to 1.0% in November from 3.1% in October, the Office for National Statistics said. This was a much sharper slowdown than the average forecast of 2.1% from economists in a Reuters poll.

If fuel sales are excluded, annual retail sales growth is now the weakest since October 2017.

Retail sales fell by 0.6% on the month and have now failed to show any monthly growth for four months in a row - the longest such run since at least 1996 - after previously supporting economic growth for most of the time since 2016's Brexit referendum.

Brexit

Prime Minister Boris Johnson's sweeping election victory last week has eliminated the risk of a disruptive no-deal Brexit on 31 January, removing some of the uncertainty hanging over the British economy.

But a hit to trade remains possible at the end of 2020, when Johnson insists a post-Brexit transition period will end, regardless of whether he can negotiate a trade deal with the European Union before then.

This year, the November retail sales sample period did not include sales promotions in the days running up to Black Friday, which fell on 29 November, but the ONS said it was confident its seasonal adjustment process accounted for this.

A fuller picture will be available once November's sales can be compared with December data.

"All main sectors saw their sales fall with the exception of food stores," ONS statistician Rhian Murphy said.

November figures from the British Retail Consortium - which also did not cover the Black Friday period this year - showed shoppers spent 4.4% less than in November 2018, though the BRC said the underlying trend was more positive.

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The ONS figures come too late to influence the Bank of England's December interest rate decision which is due for publication at 12:00 GMT.

Signs Of Weakness

The BoE is expected to keep rates steady at 0.75%, but economists expect two policymakers - Michael Saunders and Jonathan Haskel - to vote again for a cut due to tentative signs of weakness in the job market.

Consumer demand had been a strong point of the economy since voters decided to leave the EU three-and-a-half years ago. But more recently it has started to soften, despite low unemployment and modest inflation which have boosted household incomes.

Retailers have reported a mixed start to the Christmas season which is crucial for their profits.

Data published last week showed sales growth at Britain's big four supermarkets - Tesco, Sainsbury's, Asda and Morrisons - slowed as shoppers delayed Christmas preparations ahead of the election.

Department store John Lewis, which updates weekly, has reported subdued sales apart from the week of Black Friday. But there are brighter spots, such as online fashion retailer Boohoo, which reported robust trade.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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