UK retail spending skyrockets as economy reopens

UK buyers bought new clothes in April after stores reopened after months of lockdown closures, adding to signs of a robust economic recovery, official data showed on Friday.

Sales volumes in April jumped 9.2% month-over-month – twice the average predicted in a Reuters poll of economists and the biggest increase since June – after rising 5.1 % in March. Clothing sales jumped almost 70%.

“Fashion retailers (were) the ultimate beneficiaries of the reopening of the beer gardens and the return of the ‘six night rule’,” said Aled Jones, director of retail at Lloyds Bank.

Bank of England policymakers are watching retail sales closely, expecting spending to increase as wealthier households spend savings accumulated during lockdowns.

The central bank forecast this month that the economy will grow 7.25% this year after falling nearly 10% in 2020, its biggest drop in more than 300 years.

But unlike previous recessions, unemployment has remained low so far, thanks to an expensive government holiday program that has benefited millions of employees.

Separate data on Friday, from Britain’s longest-running consumer sentiment survey, showed morale in May had returned to where it was just before the country was first locked down in March 2020. read more

A man walks a dog outside a closed store ahead of the scheduled reopening next week, amid the coronavirus (COVID-19) outbreak in St Albans, Britain on April 8, 2021. REUTERS / Peter Cziborra

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The Bureau of National Statistics said retail sales in April were 10.6% above their pre-pandemic level. However, many large-scale stores have suffered badly from the repeated lockdowns that have accelerated the move to online commerce.

Department store Debenhams closed its last store this month after more than 240 years of negotiation and its brand was purchased by online retailer Boohoo (BOOH.L). Read more

Retailers such as clothing and furniture stores that the government has classified as non-essential were only able to reopen to buyers in England on April 12, after being forced to close in early January.

The share of online retail spending fell to 30.0% in April from 34.7% in March, its lowest since December. Spending at supermarkets also edged down during the month, as restaurants reopened for outdoor dining.

Sales volumes last month were 42.4% higher than in April 2020, when they collapsed during Britain’s first coronavirus lockdown, the ONS said.

Consultants Capital Economics said sales growth is likely to stabilize now that spending is above pre-crisis levels.

“The economic recovery will continue. It’s just that it will be driven by increased spending in pubs, restaurants and cinemas rather than stores,” said UK chief economist at Capital Economics, Paul Dales.

Our standards: Thomson Reuters Trust Principles.


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