"Open And They Will Come" ... the message to the retail sector. Shopper numbers jumped by over 30% as consumers rushed back to high streets and retail parks. Stores are re-opening to buyers with money to spend.
High Street footfall increased by 32% compared to last week's Bank Holiday numbers. Traffic to shopping centres increased by almost 40% according to Springboard research.
Consumers are prepared to wait for the privilege of spending money. Would be "DIYers" added a new dimension to the "B&Q" marque. Shoppers outside the IKEA store in Warrington formed a line almost one mile long, as it zigzagged across the car park. People queued from 5:30 in the morning allegedly. Always important to get an early start with flat pack, the rest of the day, so easily squandered in assembly.
To keep things in perspective, the number of shoppers at all destinations was down by 60% compared to last year. Not all stores are open as yet but there has been a change in attitude. According to Diane Wehrle, Springboard's insights director, "There has been a change in mindset. People are regarding lock down as not over but in it's closing phase".
Car showrooms and outdoor markets were allowed to open this week. Just as well, new car registrations in May were down by 89% compared to last year. Just 20,000 new cars were registered in the month. Optimists should look to the fourfold increase, on the 4,321 cars registered in April.
Consumers are returning to the stores and they will have money to spend. Household balance sheets are improving. A record £7.4 billion of unsecured debt was repaid in April. Consumers paid off £5 billion in credit card debt and £2.4 billion in personal loans over the month. Savings rates are increasing. There is a limit to how much can be spent on takeaway meals, alcohol and "Animal Crossing" upgrades.
Taylor Wimpey, one of the UK's largest house builders, reported a sharp rise in consumer interest, as it reopened sales centres and show homes this week. The national order book continued to increase. The company reported almost £3 billion of orders, on over 11,000 homes, a 6% increase on the same period last year.
As we explained in our Monthly Round-Up on Friday, the recovery in the UK will be much swifter than many expect. Problems will remain. The furlough scheme will be curtailed. Job losses will increase. The unemployment rate will increase to almost 10% by the end of the year.
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Eurozone Boost as ECB steps up ...
Christine Lagarde, President of the European Central Bank, announced a further €600 billion of bond purchases this week. The package of measures increased to €1.35 trillion in the current round.
The President warned the euro-zone faced "severe job losses and exceptional uncertainty". "There has been an abrupt drop in economic activity" it was noted.
Bond buys will run until June next year, six months longer than originally planned. A further stimulus is expected. "Net asset purchases will continue until the virus crisis phase is over". Almost €250 billion was spent in the first two months of the new scheme. The focus was on Italian bonds in the initial phase. The ECB is likely to buy €1.7 trillion of Eurozone assets this year, stepping up as the "buyer of last resort" for central governments in the club.
Angela Merkel, announced a fresh stimulus package for the German economy this week. $146 billion is to be spent to support the economy. VAT is to be cut from 19% to 16%. Cash support for families with children will be included. The rebate on the car buyers scheme will double. Money for climate change, innovation and the digital economy will follow.
The package is likely to increase pressure on the people's favourite Rishi Sunak to follow suit. The car industry is pushing for a "scrappage" scheme, to stimulate the car sector. The retail industry is pushing for a VAT reduction to stimulate the high street. The Chancellor will reserve action for the Autumn budget. The Treasury abacus is still rattling, as the cost of the furlough scheme, is brought to account.
Markets rallied this week. Our nine indices around the world all moved higher. The NASDAQ moved to an all time high. A test of 10,000 is sure to follow. Sterling rallied to $1.27, the trading range well defined.
That's all for this week. No talk about Trump! It has been such a quiet week in the White House Bunker.
Have a great, safe, week-end, wash your hands, don't talk to strangers and stay alert! Don't forget to join me for the monthly round up on line. The Saturday Economist now on ZOOM ...
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John Ashcroft publishes the Saturday Economist. Join the mailing list for updates on the UK and World Economy.
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