* UK retail sales beat forecasts in January, up 0.9% m/m
* CBI industrial orders gauge rises to six-month high
* Sales growth excluding fuel strongest since May 2018
(Wraps in CBI industrial orders data, adds detail on outlook)
By David Milliken and Andy Bruce
LONDON, Feb 20 British shoppers started spending
again early this year after a sluggish end to 2019 and
industrial orders hit a six-month high, further signs that
improved sentiment since December's election is translating into
stronger economic activity.
Retail sales beat forecasts to rise by 0.9% in January after
a 0.5% monthly decline in volumes in December, Britain's Office
for National Statistics said on Thursday.
The recovery was more marked if fuel sales are excluded,
which can give a better picture of underlying demand. Sales on
that basis rose 1.6% on the month, the most since May 2018 and
above all forecasts in the Reuters poll.
Factories reported stronger order books for February as
well, with a monthly survey by the Confederation of British
Industry pointing to the biggest rise in six months, though they
remained below their long-run average.
Consumer and business demand faltered in the latter part of
2019 as parliament deadlocked over Brexit, preventing Britain's
economy from growing at all in the last quarter of 2019.
Following a snap election in December, Prime Minister Boris
Johnson returned to office with a comfortable majority. Business
and consumer sentiment has improved since then, as Britain left
the European Union on Jan. 31 with an 11-month transition deal.
The data supports the Bank of England's decision to leave
interest rates unchanged last month, on expectations the economy
will recover early this year. Sterling erased some earlier
losses after the figures came out.
"The British consumer is a hardy beast and having weathered
the pre-election uncertainty, we have charged back into the
shops," Jeremy Thomson-Cook, chief economist at payments company
Equals Group, said.
However, some economists were less sure the pick-up would
last, with unusually wet weather and concerns about coronavirus
expected to dent consumer demand this month.
Separate data earlier on Thursday showed employers had made
the weakest annual pay offers in more than a year to staff
during the three months to the end of January, and many
economists predict Brexit uncertainties will re-emerge soon.
Annual sales growth remained lacklustre in January, up just
0.8% on the year after 0.9% annual growth in December, broadly
in line with economists' forecasts.
Sales at petrol stations fell by 5.7% in January, the most
since April 2012, which the ONS linked to higher fuel prices.
Clothing sales grew by the most since May 2018 after several
months of weakness.
Looking at the three months to January as a whole, annual
sales growth was the weakest since May 2013. Excluding fuel,
sales did not grow at all between August and December, the
weakest such run since comparable records began in 1996.
Earlier in 2019, consumer demand had helped support growth,
while businesses had put investment on hold until the course of
Brexit became clearer.
Britain has now left the EU, and after the 11-month
transition expires at the end of the year, customs checks and
new tariffs on trade with the EU are likely.
"It's probably still too early to say whether we've seen the
end of the slowdown in the sector," CBI economist Alpesh Paleja
said after the improved orders data.
"Notwithstanding improving optimism, the sector is still
grappling with longer-term uncertainty over the UK's future
relationship with the EU."
(Editing by Larry King)
LONDON British inflation unexpectedly rose to a six-month high in January, pushed up by higher petrol prices and a smaller-than-usual drop in airfares, official data showed on Wednesday.
LONDON British shoppers, home-buyers and employers grew more upbeat last month, as reports of the biggest rise in high-street sales since 2014 and the largest increase in house prices in nearly two years added to signs of a post-election bounce.
LONDON The goal of British finance minister Sajid Javid of doubling the pace of economic growth has only a one-in-five chance of success, a think tank said, citing the huge task of snapping the country out of its chronic run of poor productivity.
LONDON The British economy's post-election bounce gained strength in January as services companies enjoyed the strongest influx of new orders since mid-2018, a closely watched survey showed on Wednesday.
LONDON British retail sales flat-lined in late December and early January, according to a survey that showed no change in weak consumer spending ahead of the Bank of England's finely balanced decision whether to cut interest rates this week.
(Adds economist reaction, background)
By Andy Bruce
LONDON, Jan 28 British retail sales flat-lined
in late December and early January, according to a survey that
showed no change in weak consumer spending ahead of the Bank of
England's finely balanced decision whether to cut interest rates
Other recent surveys have pointed to a jump in optimism
among businesses and households after Prime Minister Boris
Johnson's landslide election win last month.
But the Confederation of British Industry's monthly retail
sales gauge was steady at zero in January and retailers cut
orders with suppliers as stocks of goods built up.
"The CBI distributive trades survey pointed to stable,
lacklustre retail sales in January, thereby suggesting that the
decisive general election result failed to give an imminent
boost to consumer spending," said economist Howard Archer of the
EY ITEM Club consultancy.
Allan Monks, an economist at JP Morgan, said he thought the
BoE's Monetary Policy Committee would not announce a rate cut on
Thursday after the signs of a pickup in confidence, the housing
market and job creation.
"Most on the MPC will probably have made up their minds by
now. But this is a survey which we think will appeal to the
doves as part of a decision to vote for lower rates," he said.
There were some hints of an improvement in the CBI's data.
Sales avoided their usual fall in the first month of the year
and for the three months to January, its measure of retail sales
was the strongest in a year.
But the CBI described the outlook for retailers as tough.
"A challenging Christmas has extended into the New Year,
with little expectation of any improvement soon," CBI deputy
chief economist Anna Leach said.
The boss of electronics group Dixons Carphone said
last week he was not counting on the British consumer market
improving, although the owner of the Primark clothing brand
said there was too much gloom about the outlook, citing
Britain's sound economic fundamentals.
Economists say the BoE is likely to take some comfort from
official data last week which showed stronger-than-expected job
creation in the three months to November.
But policymakers are also likely to worry about a drag on
the economy from uncertainty about Britain's chances of striking
a trade deal with the European Union before a deadline at the
end of December.
Britain is due to leave the EU on Friday when an 11-month,
no-change transition period will begin.
Economists polled by Reuters expect a 6-3 vote by the MPC to
keep rates at 0.75%. The decision is due to be announced at 1200
GMT on Thursday.
The CBI survey was based on the responses of 51 retailers
between Dec. 16 and Jan. 14.
(Reporting by Andy Bruce
Editing by William Schomberg and Giles Elgood)
LONDON Prime Minister Boris Johnson's emphatic December election win has triggered a burst of optimism among British businesses and consumers, weakening the case for a Bank of England interest rate cut this week.
LONDON British companies are enjoying their best month in more than a year, a survey indicated on Friday, the strongest evidence yet of a post-election boost to the economy that could keep the Bank of England from cutting interest rates next week.
LONDON British companies are enjoying their best month in more than a year, a survey showed on Friday, the strongest evidence yet of a post-election boost to the economy that could deter the Bank of England from cutting interest rates next week.