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What do the numbers look like?

  • The ONS data shows online retail sales were down by 2.5% in August relative to the previous month, although growth over the course of the pandemic means the sector is 46.8% up on February as a result of prior gains.

  • Sales of household goods surged in August, with retailers reporting a near double-digit 9.9% increase in homeware sales as locked down consumers get the decorating bug.

  • August’s retail sales volumes increase is rather less impressive than it first appears however, as the 0.8% growth pales against the 3.6% rise recorded in July.

 

Why does it matter?

  • Retail sales serve as an economic bellwether, constituting the first official indication of GDP performance in August.

  • The figures support the view that Britain is continuing down the path toward economic recovery this summer, boosted by initiatives such as Eat Out to Help Out.

  • Making sense of the numbers Andrew Wishart of Capital Economics said: “Having already exceeded their pre-virus level in July, the further rise in retail sales in August shows the striking rebound of consumer spending after the crisis.“

  • Lending credence to the stats, Wishart notes that this ‘chimes‘ with separate payments data from the Bank of England’s which ‘suggests that overall consumer spending may have already made a full recovery.‘

  • Wishart adds that the retail rebound is particularly notable, as it coincides with the government-backed discount dining bonanza.

  • Cautioning against unfettered optimism Wishart adds: “But spending may yet stutter as the furlough scheme is wound down and unemployment rises, weighing on household incomes and job security.“

  • Wishart also notes that spending on other sectors of the economy, such as investment, is lagging well behind.

  • As a consequence, Wishart doesn‘t expect GDP to recover to pre-virus levels until the early part of 2022 at the earliest.