In a slightly more positive week of political and economic developments, The Office for National Statistics (ONS) today announced that UK retail sales values in May 2012 were 3.3% higher than in May 2011. This welcome boost to the British high street means consumers spent about £26.4bn to the end of May, almost a billion more than the same period last year.
Such growth in retail is particularly welcome because of the muted performance of the high street in April. Sales volumes fell 2.3% compared with March, the biggest drop since January 2010 and much worse than analysts were expecting. The slump can be attributed partly to the government-induced petrol crisis. Stations were unable to re-stock their tanks in time for the start of April, skewing the month’s retail figures. April also suffered from sliding clothing and footwear sales, but the ONS says they’re exactly what we’ve been bingeing on in May. So back on form, then.
With news that UK unemployment is falling, car manufacturing is enjoying a small boom, and the situation in the eurozone looking like it may finally be stabilising (thanks to some hefty bailout agreements reach at the G20 summit), you could be forgiven for thinking all’s quiet on the Western Front. But alas, America’s Federal Reserve (a bit like our Bank of England) has cut its forecast for economic growth in the country from 2.9% to 2.4%, with chairman Ben Bernanke blaming the ‘headwinds’ of economic uncertainty in Europe.
Bernanke and his chums in the Fed still expect the US economy to enjoy moderate growth. But while the country has been doing comparatively better than the European economies, anything that looks like a step back is bound to be disappointing. On the plus side, the Fed has been credited with achieving some growth by selling short-term US government debt and buying long-term debt, a scheme known as Operation Twist, which has a similar effect to quantitative easing.
Back on home turf, Bank of England governor Mervyn King is attempting a similar monetary boost: pushing for a £50bn tranche of quantitative easing. And at the G20 summit, world leaders are also hatching plans to ensure the future stability of the eurozone economy…and the rest of the world. Let’s hope at least one of these measures gives us the results we’re after. And it’ll give the guys at ONS HQ something to get excited about…