MNI DATA IMPACT: UK Retail Sales Beat Forecast, To Lift Q3 GDP

UK retail activity rose by much more than expected in September, leaving the sector poised to provide a healthy lift to gross domestic product in the third quarter, data released Friday by the Office for National Statistics showed.

Overall sales increased 1.5% between August and September, far outpacing the 0.2% forecast by City economists. That left sales 5.5% above February levels, before Covid's devastating impact the economy. On an annual basis, sales volumes increased by 4.7%, the biggest rise since April 2019.

Sales jumped by 17.4% between July and September, the biggest quarterly increase in a series dating back to 1996. That means the retail sector will contribute 0.94 percentage points to third quarter GDP, the biggest contribution on record, according to an ONS official.

PAST PRE-PANDEMIC LEVELS

Volumes increased at all major categories of physical stores, taking total non-food sales 1.7% above February levels. With the exception of department stores and clothing outlets, all sectors have regained their pre-pandemic sales levels. Clothing sales increased by 3.6% in September but remain 12.7% below February levels, while department store sales have fallen by 0.9% since February, despite a 2.3% increase last month.

Internet sales extended their gentle retreat, falling 1.2% in September, but the decline was more modest than the 3.0% slide of August. Internet sales were still 53.0% above the same period of 2019, taking online transactions to 27.5% of all activity, down from the record 33.9% recorded in May.

Excluding fuel, sales increased by 1.6%, or by 6.4% over September of 2019. Petrol sales increased by 0.1% and remain 8.6% below February levels.