Retail sales bounce back in July, boosted by Euros and discounts

16th Aug 2024 07:14

(Sharecast News) - Retail sales bounced back in July, albeit a touch less than expected, according to figures released on Friday by the Office for National Statistics.

Retail sales volumes rose 0.5% on the month in July following a 0.9% decline in June, when they were hit by bad weather and uncertainty over the general election. Economists were expecting a 0.6% increase.

June's fall was revised from an initial estimate of a 1.2% decline.

The data showed that sales volumes were up 1.4% versus July 2023. Compared with their pre-Covid level in February 2020, sales were down 0.8%.

ONS director of economic statistics Liz McKeown said: "Retail sales grew in July led by increases in department stores and sports equipment shops, with both the Euros and discounting across many stores boosting sales.

"These increases were offset by a poor month for clothing and furniture shops, and falling fuel sales, despite prices at the pump falling."

Alex Kerr, UK economist at Capital Economics, said the better start to the third quarter is not as good as it looks.

Kerr said: "The rebound in sales volumes wasn't particularly broad based, with sales rising in three of the seven main sub sectors. Department stores posted a 4.0% m/m gain, with the ONS reporting that summer discounting and the Euro 2024 football championship boosted sales volumes. That said, the euros didn't appear to bolster food sales volumes by much as they were unchanged in July. 'Other' stores, such as stalls and markets, and online sales also rose by 2.5% m/m and 0.7% m/m. But clothing and household goods sales both fell by 0.6% m/m. And fuel sales declined by 1.9% m/m, despite the 0.8% m/m fall in petrol prices in July.

"Ultimately, while it is good news that the retail sector has returned to growth at the start of Q3, it is perhaps not as good as the 0.5% m/m rise suggests. That said, overall real consumer spending still rose by 0.2% q/q in Q2 despite the 0.1% q/q decline in retail sales. And if spending off the high street continued to hold up well, overall consumer spending may be more robust than the retail sales data imply. What's more, we continue to think that rising real incomes, as inflation falls, should mean consumer spending growth accelerates over the rest of this year."