The rise of 1.3% in-store and online sales ‘has all the hallmarks of a weather-related blip’
Better weather brought some much-needed respite to Britain’s struggling retail sector last month as the hottest May on record brought consumers flocking back to the high street.
The volume of goods sold in shops and online was 1.3% up on April – comfortably beating predictions in the financial markets of a 0.5% increase.
The Office for National Statistics said feedback from retailers suggested that a hot, dry spell and royal wedding celebrations boosted spending in supermarkets and household goods stores during the month.
“As we began to experience warmer weather in April, temperatures rose to above average in May, which contrasts with the lower than average temperatures experienced in February and March. This shift to warmer weather may have encouraged consumers to spend later in the year”, the ONS said.
Annual growth in retail sales picked up sharply from 1.4% to 1.9%, although the ONS said that was partly due to a weak month for consumer spending in May 2017.
Traditional high-street retailers have been facing tough trading conditions, with a structural shift towards online shopping accompanied by a squeeze on real incomes throughout 2017 caused by the fall in the value of the pound following the EU referendum.
Recent months have seen earnings grow slightly more quickly than prices, adding to consumer spending power.
While retailers are hopeful that the World Cup will underpin spending in June and July, the pick-up has come too late to prevent a spate of retail failures and almost 6000 store closures during 2017.
In the three months to May – a better guide to the trend than one month’s data – retail sales volumes rose by 0.9%. The latest three-month period includes both the weakness caused by the “beast from the east” cold snap in early March and the more recent bounce back in consumer spending.
Samuel Tombs, of PantheonMacro, said: “The jump in retail sales in May has all the hallmarks of a weather-related blip, rather than a sustainable pick-up in spending. Overall growth was boosted by sharp increases in sales of clothing, sporting goods and garden items, up 1.7%, 3.3% and 6.2% month-to-month, respectively.
“Average temperatures were 1.8 degrees above their 1970-to-2016 May average, persuading households to purchase items that they forewent in February and March when the weather was unusually cold.”
Ruth Gregory, UK analyst at Capital Economics, said that even if retail sales were to fall by around 1% in June, they would still rise by 1.8% over the quarter, the largest quarterly gain since early 2016 and a vast improvement on the 0.3% quarterly fall in the first three months of 2018.
“Since retail sales account for around a fifth of GDP this could add as much as 0.4 percentage point to growth in the second quarter relative to the first quarter – although the boost is unlikely to be quite this large given the evidence of weak spending off the high street.”
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