- Kate Davies from the ONS
Retail sales, a key measure of consumer spending, fell in line with analysts' forecasts in May. A drop was widely expected, as April's reading was mostly driven by the later timing of Easter this time. Therefore, market reaction was muted, and the cable was able to hold above 1.70-mark, suggesting Mark Carney's hint about the potential sooner-than-expected rate hike, provided a long-term bullish support for the Sterling.
A report from the ONS showed that sales month-on-month fell 0.5% in the fifth month of 2014, in line with analysts' predictions, and compared to a negatively revised jump of 1% a month earlier. A core measure also plunged 0.5%, just slightly above expectations. On a yearly basis, retail sales expanded 3.9%, compared with predictions for a 4.2% hike. Despite a drop, actual retail sales over the observed period have risen, pointing at the continuing impact and rising popularity of online shopping.
Thursday's figures will definitely not alter Mark Carney's upbeat view of the domestic economy. A day ago, the Bank of England claimed the recovery is getting more sustainable, while economic growth is getting more healthy and balanced. Next week, the central bank will unveil its Inflation Report, while final GDP can only cement the view the first rate hike can be made already later this year.
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