December 20, 2018 / 10:22 AM / 5 months ago

UPDATE 2-Bumper Black Friday boosts UK retail sales, broader picture weak

    * Retail sales volumes jumped by a monthly 1.4 pct
    * Analysts say figures should be treated with caution
    * In three months to November, sales rise more modest
    * CBI reports weakest sales since Oct 2017

 (Updates with CBI December retail data in paragraph 8-9)
    By Andy Bruce and William Schomberg
    LONDON, Dec 20 (Reuters) - British shoppers sought out Black
Friday discounts in their droves last month, pushing retail
sales growth to a six-month high, but the broader picture
remains weak ahead of Brexit in little more than three months'
    Official retail sales volumes, including the Black Friday
sales period, jumped by a monthly 1.4 percent following two
months of decline, surpassing all forecasts in a Reuters poll of
economists that had pointed to a 0.3 percent gain.
    The Office for National Statistics (ONS) said the changing
nature of Black Friday sales promotions posed a challenge for
smoothing out seasonal variations in the data and economists
said November's jump was likely to be revised down.
    "It's worth treating these numbers with some caution," ING
economist James Smith said. "Whatever the case, it seems clear
that the Christmas trading period has been a particularly
challenging one for retailers."
    In the three months to November as a whole, sales were up
just 0.4 percent compared with the previous period, the smallest
increase since April.
    The pound rose slightly to touch a day's high against the
U.S. dollar after Thursday's figures. 
    The November sales surge in the ONS figures contrasted with
statements from some major retailers and business groups that
showed a disappointing Black Friday.
    The Confederation of British Industry said retail sales
between Nov. 26 and Dec. 14 suffered their biggest fall in 14
months, and that sales for the time of year were the worst since
November 2011. 
    It blamed a mix of squeezed household incomes, a shift to
online spending and consumer jitters ahead of Brexit.
    Online fashion store ASOS issued a profit warning on Monday
as its November trading fell short of expectations, while the
owner of the Primark clothing retailer said the market was
"challenging" last month.                          
    The ONS said household goods sales leapt by 5.3 percent on
the month in November, the biggest rise since the end of 2013. 
    Online sales as a proportion of all retailing exceeded 20
percent for the first time.
    Thursday's ONS numbers will not influence the Bank of
England's policy announcement due at 1200 GMT because the
central bank's interest rate-setters have already concluded
their December meeting.
    They did not see the ONS retail sales report in advance.
    Economists expect no change in rates from the BoE but want
to know how the central bank views recent signs of a slowdown in
Britain's economy.
    Growth has slowed since the Brexit referendum in June 2016
but household spending was strong over the summer of 2018.
    Britain's scheduled departure from the European Union on
March 29, with no clarity yet on whether it can leave with a
transition deal, has weighed on consumer confidence. 
    November data from the British Retail Consortium and
Barclaycard has shown households were cautious about spending.
    But there has been some comfort for consumers in recent data
which showed the fastest growth in underlying pay growth since
2008 and inflation falling to a 20-month low of 2.3 percent.

 (Additional reporting by David Milliken
Editing by Edmund Blair and Raissa Kasolowsky)
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