UK retailers have enjoyed something of a resurgence this month. According to a report from business organisation the CBI, 51% of retailers saw year-on-year spending rise this month while just 18% saw a drop - that difference of 33% is the highest balance since April 2007 (although the CBI has changed its working slightly). Even more encouraging is the suggestion that the rise is likely to be contained – despite naysayers’ talk of an impending double-dip…
The CBI’s Distributive Trades Survey put the rise (which was three times better than expected) down to sunshine and football. And you can see why: among the strongest sectors were grocers (purveyors of beer and barbecues), clothing (football strips) and ‘footwear and leather’ (trainers and boots). So at least the World Cup wasn't all bad for England. Summer discounts also contributed to the jump.
Better still, retailers are expecting the rises to carry on throughout the summer. But the CBI isn't convinced: consumers might be making the most of the hot weather now, but spending cuts and tax rises will start having an impact before long, it reckons. ‘We expect the recovery in overall consumer spending to be fairly restrained’, said Lai Wah Co, the CBI’s head of economic analysis. Killjoy.
Wholesalers are already feeling the squeeze: compared to last year, 42% say they’re doing less trade while just 31% said they’re doing more – a -11% difference which is ‘notably lower’ than the +26% the CBI expected. And they aren’t particularly optimistic about their prospects for next month, either: 18% expect their sales volume to drop. (Although that could have something to do with the fact that most people take their holidays in August, which means business will inevitably drop slightly).
Still, the luxury end of the market is holding up well too – LVMH, the owner of luxury brands including fashion label Louis Vuitton and Dom Pérignon champagne, has reported a €1.1bn (£919m) profit in the first six months of the year, defying expectations. The company’s strategy of investing in fast-growing market like China has obviously paid off: so far this year, Asia has been one of its most important markets.
So it looks as though the new Government's age of austerity hasn't quite made its way to consumers. And although the World Cup might be over, we’ve still got the World Chess Olympiad to look forward to. Surely we’ll need a new TV for that?
In today's bulletin:
Heat is on British Gas as profits double
Emergency Budget won't tip us back into recession (probably)
Retailers are World Cup winners as sales rise
Labour PFI contracts: 'good value' for taxpayers' money?
Letters from Malawi: What good is a house if there's no one to buy it?