A surprise rise in UK retail sales is boosting recovery hopes there.
The latest statistics show sales grew in July – up 0.3 percent from the previous month and 2.8 percent year on year.
They were also stronger than first thought in June.
That has raised hopes that consumer spending will help lift the UK economy out of the recession it has officially been in since late last year.
If you look at the (retail) trend, it’s been sharply higher for the last year and that’s no accident,” said Alan Clarke, economist at Scotiabank. “Inflation has slumped, there’s 335,000 more people in work and they’re spending it.”
Together with significant upward revisions to second-quarter construction and manufacturing figures, the latest data increased the chance that the originally reported 0.7 percent drop in GDP will be revised up.
“Retail sales do correlate with one of the big services components, so there’s a good chance that all the doom and gloom for Q2 was overdone,” Clarke said.
Most economists expect the economy to grow in the third quarter, after an extra public holiday to mark Queen Elizabeth II’s 60 years on the throne lowered output in the second quarter.