- Rain Newton-Smith, CBI Director of Economics
UK annual retail sales growth surprisingly increased this month, due to significantly low cost of living and rising real earnings. The Confederation of British Industry´s distributive trades total sales index surged to +24% in August following a print of +21% a month before, reflecting a pace of growth that was considerably above average for that time of year. The sales in August were supported by clothing and grocers' sales after two-month stagnation. The report also indicated that sales volumes are predicted to increase further in September. Companies increased their payrolls for the first time this year given expectations for a continued improvement in the business conditions over the coming quarter. Expectations for recruitment were at their best since May 2000.
According to the official data, declines in fuel sales as well as clothing and food translated into total retail sales volumes rise by just 0.1% in July. The latest report also confirmed total retail sales fell during the second quarter to 0.7% growth, compared with 0.8% in the first three through March. Despite slowing, quarterly growth should still have a positive contribution to the second-quarter economic output, by approximately 0.04%. Expectations for domestic spending in the UK have been mixed recently, with some analysts warning it could deteriorate even further once the BoE begins to hike its interest rate from the record low of 0.5%, given the burden of household debt and rising house prices.
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