UK retail sales up as consumers defy Brexit turmoil

By BLOOMBERG

LONDON • UK retail sales increased for a third consecutive month in March, with online shopping and groceries accounting for much of the improvement.

The volume of goods sold jumped 1.1% from February, defying economists’ expectations of a decline.

Almost three quarters of the increase was due to “non-store” sales and food, the Office for National Statistics (ONS) said yesterday.

The strength of online sales contrasts with the gloom in brick-and mortar retailing, with department-store owner Debenhams plc becoming the latest victim this month when lenders took over in a debt restructuring deal that wiped out shareholders.

Philip Green’s Arcadia Group Ltd retail empire has named restructuring experts to its board, while the likes of BHS Ltd and electronics chain Maplin Electronics have disappeared entirely.

Sales at department stores and spending on household goods fell in the latest three months compared to a year earlier, while non-stores sales jumped more than 18%. Online operators now account for 18.6% of the value of all retail sales.

The resilience of consumers in the face of Brexit uncertainty is largely being supported by the labour market, where pay growth is picking up, employment is at a record and the jobless rate is the lowest its been since the 1970s.

But there are signs that some households are under pressure as they emerge from a protracted inflationary squeeze on living standards.

The Bank of England reported yesterday that defaults on credit cards rose significantly at the start of the year.

Retailers made a positive contribution to the economy in the first quarter (1Q), with sales rising a respectable 1.6% from the final three months of 2018. That added 0.09 percentage point to growth, according to the ONS.

Meanwhile, businesses are cutting spending, fearing an economic slowdown could turn into a slump if the UK ends up leaving the European Union without a deal to cushion the blow.

Retail sales last saw three straight gains in the summer of 2017. But the annual pace of growth was inflated by poor figures in March 2018, when Britain was hit by snow and freezing temperatures.

Sales leaped 6.7% from a year earlier in March, the fastest pace since October 2016, and were up an annual 5% in the 1Q.

Retail sales excluding auto fuel rose by 1.2% last month, with warmer weather encouraging spending and food sales also recovering after a weak February.

Clothing and household goods posted strong gains, only partly offset by weaker sales at department stores. — Bloomberg