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Retail Reflections: Consumer spending confounds economists

Alan Monahan writes: I took professional predictions and polls with a pinch of salt long before the European Union referendum and General Election, although I suspect that, like me, those outcomes may have surprised more than a few of you.

 

Media folk are fed research and umpteen surveys on every imaginable subject, and the data that emerges from some appears more and more bizarre by the day.

The stuff from minor American universities takes some beating. You know the sort of thing: if you walk backwards into a gale, the wind blowing up your rear end will cause your teeth to decay – unless you eat cheese on a Tuesday.

Okay, dear reader, I exaggerate somewhat.

However, when it comes to negative survey findings about the state of confidence among businesses, I do worry that these become self-fulfilling prophecies.

The latest come from the Federation of Small Businesses, which warned that optimism among smaller companies is at its lowest level since the immediate aftermath of the Brexit vote.

Economists don’t help either. They have a woeful track record when it comes to telling us how the public won’t be spending its money, so I was delighted to see that UK shoppers have once again thumbed their noses at these so-called experts.

The Office for National Statistics has reported that in August retail sales in the UK increased by 1% compared with July – a much faster pace than expected. And against August 2016, the quantity bought increased by 2.4% – the 52nd consecutive month of year-on-year increase in retail sales.

Retailers across the gift and home industry will be relieved that the contributions to the overall growth came from non-essential items. Year-on-year food store sales remained flat.

The latest CBI Distributive Trades Survey was even more positive news, reporting that retail sales volumes grew at the fastest pace for two years in the year to September following a decline in the previous month’s figures.

The survey of 117 respondents, including 55 retail firms, found that sales for the time of year were considered to be slightly above seasonal norms. Meanwhile, orders placed with suppliers also rose in the year to September, also rebounding from a fall in the previous month. Retailers expect continued growth in both sales and orders in the year to October, albeit at a slower pace.

Growth in internet sales volumes rose in the year to September, to slightly above the long-run average, and are expected to expand at a somewhat slower pace in October.

This is welcome positive news for gift shop owners, despite ONS senior statistician Kate Davies revealing that within the month’s retail sales there were “strong price increases across all store types compared with a year ago, reflecting wider inflationary pressures.”

In fact, prices increased at their highest rate for 25 years, so three cheers for the resilient Great British Consumer. Retailers will be hoping that they keep their nerve in the run-up to Christmas and carry on spending.

As for those smaller companies I mentioned, they will want to see the UK’s Brexit negotiators making real progress in the coming weeks. I wouldn’t bet my house on that happening, which says much about my general lack of faith in politicians of all persuasions!