July jump for retail sales

The UK economy may not be doing as badly as we thought, after upturns in retail sales and factory output provided a small July boost.

by Michael Northcott
Last Updated: 19 Aug 2013

The high street enjoyed a slight improvement in conditions in July, with retail sales rising 0.3% compared with the previous month, and total sales volumes up 2.8% compared with July last year. The Office for National Statistics also revised up its figures for June, showing a 0.8% rise instead of the 0.1% originally reported. It means that the overall decline in retail sales in Q2 was just 0.3% compared with Q1. Is it the Olympic effect again?

Well, actually, no. The figures seem to suggest that retailers reported no impact from the opening two days of the Olympics (which were the final two days of July). But there is an upside: with falling unemployment reported yesterday, and stronger output from manufacturers and the constructions sector, it is thought that the GDP figures from some weeks ago may have to be revised upwards, too. That will mean that the UK recession is not as deep as feared and herald some hope of a recovery. Hurrah!

On construction, here are the details: the ONS originally estimated that construction output had fallen by 5.2% in Q2, but has since revised the figure to 3.9%. That discrepancy alone would suggest an upward revision of at least one basis point in GDP, from a 0.7% contraction to 0.6%. If that’s the case, then the work needed to get back out of recession is less and means it could be quicker. This would also solve the conundrum of unemployment falling and GDP contracting at the same time: if the discrepancy isn't as wide as we thought, then the economy may start to make sense again...

Yesterday’s employment figures showed that Britain has actually created 130,000 full-time jobs nationwide, partly due to the Olympic effect boosting hiring in London. And now we’re only 100,000 jobs away from restoring the Labour market to pre-recession capacity. Let’s hope we’ve got enough steam to keep this up…

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