Sales uplift

Retail rebound raises hopes of short recession

Retail, Multrees Walk
Shops enjoyed their biggest rise in monthly sales for three years (pic: Terry Murden)

Retail sales rebounded strongly in January but only added further confusion to consumer spending patterns following a record fall in December.

Sales across Britain rose 3.4% last month, registering the largest monthly rise in almost three years and recovering from the 3.3% dip in the final weeks of last year.

Non-food store sales volumes rose by 3.0% while food rose by 3.4%. Clothing was the only category to report declining sales, down 1.4%, according to data from the Office for National Statistics.

The figures defied worries that sprang from yesterday’s GDP figures confirming the economy had slipped into recession at the end of 2023. They will be seen as endorsing the view that the recession will be short-lived and that the recovery may be under way.

Among retailers trading higher on the stock market this morning were JD Sports, up 1.6% and Marks & Spencer which rose 1.2%.

They helped lift the FTSE 100 index which was trading more than 50 points higher at 7,651.62 in opening dealings.

Charlie Huggins, manager of the quality shares portfolio at Wealth Club, said: “UK consumer spending is proving highly volatile from one month to the next. The December figures suggested signs of pressure, whereas January’s figures indicate the UK consumer is still in rude health. 

“The reality is probably somewhere in between. Higher interest rates and cost of living challenges continue to present challenges for many, but employment remains high and wages are still rising at a decent clip. 

“Overall, there is certainly no sign of widespread doom and gloom from these figures. But the volatile nature of UK consumer spending indicates a degree of caution, and makes retail trading patterns for the balance of the year even more difficult to predict than usual.”

ParcelHero’s head of consumer research, David Jinks, says: “Recession? What recession? It’s great to see the majority of retail sectors bounce back after a torrid December. Food sales volumes boomed by 3.4% and juicy January Sales meant department store sales volumes rose by 5.4% and other non-food stores (such as sports equipment stores) rose by 6.2%.

Xmas Day shopping online
Online sales fell as a proportion of all retail spending (pic: Terry Murden)

“However, it’s not necessarily good news for British consumers. We all spent more for less, thanks to inflation. While we bought 3.4% more in terms of volumes, the amount we spent rose by 3.9%. And those New Year sales failed to tempt us into buying clothes. Fashion and footwear sales volumes were down -1.4% in January against December.

“We also spent a significant -4.1% less online last month. That means the proportion of sales made online fell from 26.8% of all retail spending in December down to 24.8% in January.

“That’s a surprise as, following a post-Covid bubble slump, online sales have been averaging around 26% of all retail sales for more than a year.

“E-commerce retailers will be warily watching the next set of monthly sales figures, to see if this was just a temporary blip. The better news for online sellers is that the value of retail sales was actually up 1% against January 2023.”

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