At first glance, the retail sales figures for January might seem a tad disappointing. Sales were down 1.5%, the sharpest monthly fall since April 2012 and below what economists were expecting. The decline follows a strong December, when sales rose 2.5%. Retail sales were up 4.3% year-on-year, which was also weaker than expected.
Getting in a lather about one month of sales data would, however, be jumping the gun a bit (the Office for National Statistics either agrees and wants to soothe us all or just loves social media, taking part in an #askONS twitter q&a). A couple of things to note beyond the headline stats:
- Christmas always means a surge in sales in December, followed by a lull in January as people tighten the purse strings (see graph below).
- Retail sales are up 1.1% on a three-month basis – even if you include the fall in sales last month, spending is still rising.
- Last January, year-on-year retail sales fell 1.2%. The consumer volte-face has been pretty substantial if you take a slightly longer view then.
- Sales of household goods jumped 9.8% compared to 2013, the largest year-on-year rise since July 2007.
Seasonally-adjusted retail sales volumes and values. Source: ONS
The ONS blamed heavy snow in January 2013 for the leap in sales of household goods (it’s always the weather…); however, the surge ties in rather neatly with the rebounding property market. While rising sales is great news for retailers, who are queuing up to list on the stock market instead of going bankrupt, economic growth driven by debt-fuelled consumer spending and a potential housing bubble is not particularly sustainable. Look where it got us last time…