MNI DATA IMPACT: Strong March UK Retail Sales; Q1 GDP Upside

By David Robinson and Laurie Laird

     LONDON (MNI) - The following are the key points from UK Retail Sales

published Thursday by the Office for National Statistics.

     - Monthly retail sales data often confound forecasts, and the March data

continued that trend. Sales volumes surged by 1.1% over the month, far exceeding

the Bloomberg median of a 0.3% fall, and jumped by 6.7% over March of 2018, the

fastest annual pace since October 2016.

     - Retail sales in March posted their third consecutive monthly increase on

both the including and excluding automotive fuel measures. The last time there

were at least three months of consecutive monthly rises by the ex-automotive

fuel measure was back in the November 2015 through February 2016 period.

     - The strength of UK consumer spending bodes well for Q1 GDP, with National

Statistics estimating that it will add 0.09 of a percentage point to quarterly

growth. The retail sector amounts to 5.4% of GDP.

     - In the March Monetary Policy Committee minutes Bank staff raised their Q1

GDP forecast to 0.3% on the quarter from 0.2% in the February Inflation Report,

but even that estimate could be on the low side. While there has been weakness

in some business survey indicators consumer demand appears to have held up.

     - The food sector performed strongly, up 1.1% on the month and up 3.3% on

the year. The strong monthly food sales represented a bounce back from a weak

February.

     - National Statistics officials noted that food sales in supermarkets,

specialist food stores and sales of alcoholic beverages were all weak in

February, although the reason why was unclear.

     - The only sector to see sales volumes fall on the year in March was

department stores. Other survey evidence has pointed to weakness in big ticket

items, which would correlate with weakness in the housing market.

     - The ONS data for Household goods stores, however, fared a little better,

with volumes up 1.8% on the month following a 1.2% rise in February, although

both months only partially retraced the 5.1% plunge in January.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com