Economy shows resilience
Retail rebounds as unemployment falls again
Most growth is in food sales, according to new data
Britain’s economy continues to show a resilience against more cautionary forecasts, with unemployment falling and retail sales rebounding.
Unemployment in Scotland for the last quarter fell from 4.4% in the first quarter to 3.9% between April and June.
This is below the UK rate of 4.4% which is at its lowest since 1975 against the average forecast for it to hold at 4.5%.
More people in Scotland are in work as the latest jobs figures show an increase in employment to a record high and a fall in inactivity.
Scotland’s employment rate increased by 1.1 percentage points to 75.2% over the quarter, meaning 30,000 more people in employment, according to the Labour Market Statistics for April to June published by the Office for National Statistics (ONS). There are now 2.65 million people in employment in Scotland – 86,000 more than the pre-recession peak and above the UK rate.
Over the quarter, the inactivity rate fell 0.7 percentage points to 21.8%.
But the figures on wage growth showed the challenge facing Prime Minister Theresa May and her government, with households feeling the strain of rising prices since last year’s Brexit vote.
Average weekly earnings for employees increased by 2.1% in April-June, compared with a year earlier, which is less than inflation at 2.6%.
Retail bounced back to growth last month amid concern that the inflationary pressures remain.
Scottish sales increased by 1.3% in July on a like-for-like basis compared to July last year, when they fell by 1.7%.
Most growth was in food sales, while non-food sales contracted, but analysts said there were signs of improvement.
Craig Cavin, head of retail in Scotland for KPMG, said: “There were signs that the tide was beginning to turn for non-food sales – no doubt bringing with it a much needed sense of optimism for the industry.
“Growth in food sales appears to be the new norm, albeit heavily driven by inflation. In fact, grocery sales have remained in the black for six straight months now. The hope now is that non-food sales can have its own resurgence.”
David Lonsdale, director of the Scottish Retail Consortium, said: “Retail sales in Scotland witnessed a welcome resumption to growth last month, turning in a creditable performance driven by grocery sales and a better showing from non-food categories.
“Adjusted for shop price inflation, which has continued to fall, this was the best performance for three months and the second strongest this year.”
The figures were released a day after inflation data showing the cost of living remained unchanged.
Paresh Davdra, CEO of RationalFX said: “The inflation figures surprised analysts through holding steady at 2.6%. A fall in fuel prices also suggests that the squeeze on UK households has abated, but the rise in the retail price index to 3.6% indicates it may be a temporary reprieve.