Spend! Spend! Spend! The Shoppers are Back ... Driving Recovery
Retail sales jumped by over 9% in April as masked shoppers returned to the high street. Sales were up 40% compared to April last year. Sales were up by 12% compared to pre-pandemic levels in the months of 2019.
Clothing stores were major beneficiaries. Sales volumes increased by 70% compared to prior month. Household goods sales jumped 10%. Furniture sales leapt by 30% as showrooms reopened. Electricals were up by 29%. Sales of cosmetics were up by 25%. DIY and garden centre sales were down. Shoppers had other things on their mind as the high street moved back into business.
Salvation for the high street? More of a respite perhaps. Online sales increased by 32% year on year. Clothing sales were up by over 80% year on year. Household goods sales were up by almost 30%. As a proportion of all retail sales, online slipped to 30% of all retail. This was in line with our 30% forecast for the second quarter, as more options open for retail traffic.
Fastest Output Growth for Twenty Years ...
Business activity is expanding at the fastest rate since records began according to the latest PMI® data compiled by IHS Markit and CIPS. The composite output index increased to 62.0 compared to 60.7 last month. The manufacturing index increased to 63.2. The service sector index increased to 61.8. This all bodes well for a strong recovery this year.
Chris Williamson, Chief Business Economist at IHS Markit, said "The UK is enjoying an unprecedented growth spurt as the economy reopens. Factory orders are surging at a record pace as global demand continues to revive. The service sector is reporting near record growth as the opening up of the economy allows more businesses to trade. Business confidence has hit an all time high as concerns about the impact of the pandemic continue to fade.
The strongest upturns in demand were reported for hotels, restaurants and other consumer facing services. The output and order book growth seen in May, and the record level of business optimism, are consistent with GDP rising sharply in the second quarter, he said
Growth expectations rise for the year ...
Growth expectations have been revised up according to the latest forecasts for the UK economy published by HM Treasury this month. The average forecast for GDP growth is now 6.4% compared to 5.3% last month. Growth in 2022 is expected to slow slightly to 5.7% compared to 5.3% last month. The American banks lead the pack. Goldman Sachs forecast growth of 8.1%. JP Morgan forecast growth of 7.9%. The Bank of England now expects growth of 7.25% in 2021.
For the moment economists appear to be pretty relaxed about the prospects for inflation. CPI inflation is expected to average 2.2% in the final quarter and through most of the following year. The unemployment rate is expected to fall to 5.2% by the end of 2022.
The Saturday Economist Live ...
Want to know more? We will be talking about growth, jobs and inflation at The Saturday Economist Live on zoom, Thursday next week. Almost 200 have already signed up. You can do so today ... We are very excited about the format ... fast moving, content rich and fun! We will be talking about What's next for crypto with some great clips of Elon Musk, the "Father of Dogecoin" on Saturday Night Live ... Don't miss that.
That's all for this week, I look forward to seeing you on Thursday, Stay Safe,
The Saturday Economist
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