020 7898 0500City economists had expected retail sales to increase in May, but only to 2.4% from 1.4% the month before. So it was extremely encouraging when the figures were released and showed sales jumped to 3.9%. It is the steepest increase in retail sales since April 2017 and the pound strengthened sharply against the dollar following the release. Investors are currently inclined to grab onto any piece of positive UK data they can get their hands on at the moment, and there is a general feeling that the chances of a UK interest rate rise in August have increased. Unfortunately for the pound, US retail sales were also hugely impressive and the pound fell back and ended up losing a lot of ground by the close of play.
Still, it is worth taking the figures with a pinch of context. House of Fraser recently announced it is set to close more than half of its UK stores and Poundworld has also been struggling of late. Interestingly – and somewhat worryingly – online fashion retailer boohoo.com has recently shown a 49% jump in UK sales, so it is clear that much of the British public are turning away from the high street and purchasing their wares from the comfort of their own home. What is convenient for the consumer is the opposite for high street retailers and their employees. Hooray for the 21st century.
With no major economic data releases scheduled for the UK today, attention will likely turn to the US and eurozone. Having said this, the political turmoil that has engulfed the Conservatives and Labour party recently looks likely to continue so it is possible that situation could capture headlines.
