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UK retail sales surge as sun brings out shoppers

Published 21/05/2015, 12:40
© Reuters. A woman carries shopping bags as she walks along Oxford Street in central London
WMT
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By William Schomberg and David Milliken

LONDON (Reuters) - British retail sales surged in April as consumers took advantage of falling prices and unusually warm weather encouraged shoppers to buy new clothes.

Thursday's strong official data suggest a slowdown in the economy seen at the start of the year may prove short-lived.

Retail sales volumes rose by a stronger-than-expected 1.2 percent from March, the biggest monthly increase since November, the Office for National Statistics said. Annual sales growth picked up pace to 4.7 percent.

The pound jumped to its highest level in two months against the euro and strengthened by 1 percent against the dollar.

"This robust April reading is a great springboard to a strong second-quarter gross domestic product reading," said Alan Clarke, an economist at Scotiabank.

Quarterly growth in the April-June period could accelerate to 1 percent after slowing to 0.3 percent in the first three months of 2015, he added.

Some of the sharp increase in sales was due to a surge in purchases of clothing, textiles and footwear, which jumped by 5.2 percent in April from March, the biggest monthly rise in four years though one which might prove to be a one-off boost.

"You've had warmer than average weather which has led to consumers bringing forward purchases of summer clothing," an ONS official said.

Excluding fuel, sales were also up by 1.2 percent in monthly terms and by 4.7 percent compared with April last year.

A drop in fuel sales in March, when oil prices showed some recovery from their previous slump, had caused overall retail sales in that month to plunge by 0.7 percent.

By contrast, fuel sales in April rose 2.0 percent from March, the ONS said.

Britain's consumers have been the main driver of the country's economic recovery which began in 2013. A fall in inflation, which turned negative in April for the first time since 1960, and a pick-up in wages have helped restore some of the spending power lost in the years after the financial crisis.

Manufacturers are having a tougher time than retailers.

A monthly survey by employers group CBI showed factory orders slowed to their lowest level in seven months in May although companies remained optimistic about the short-term outlook as the euro zone shows signs of recovery.

Elizabeth Martins, an HSBC economist, said the strong retail sales numbers suggested consumers were finally starting to respond to the boost in spending power brought by last year's slump in oil prices and a recent tentative pick-up in wages.

But food sales fell by 0.1 percent in April, underscoring a weakness in demand faced by some supermarkets.

© Reuters. A woman carries shopping bags as she walks along Oxford Street in central London

Asda, the British arm of U.S. retailer Wal-Mart (NYSE:WMT), reported its worst quarterly sales in more than five years on Tuesday and its chief executive said customers were "not yet cash-confident".

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