Retail and Automotive Commercial Properties Contribute to Sharp Rise in UK Sales

Posted on 24 April, 2012 by Neil Bird

After months of seemingly endless gloom for the UK economy, last week’s news that unemployment has fallen slightly came as a welcome relief. Now this has been followed by yet more encouraging statistics – this time showing the biggest monthly rise in retail sales in over a year.

The report from the Office for National Statistics (ONS) shows a 1.8% month on month rise during March. Among the reasons cited for the increase in consumer spending are last month’s unseasonably warm weather and the threatened strike by fuel tanker drivers.

These factors led to strong sales of summer clothing in retail commercial properties and panic buying of petrol in automotive commercial properties, following the much criticised advice to fill up jerry cans issued by cabinet member Francis Maude.

Clothing sales rose by 2.8% while “automotive fuel stores” saw a 4.2%, increase in sales, the largest since January 2011, when motorists began filling up their tanks following a month of heavy snow.

The ONS attributed this rise to “consumers purchasing more fuel in case the threat of a fuel strike in the latter part of the month came to reality”. Despite this factor, some analysts are confident that the overall picture is encouraging. On the other hand, others suggest commercial property occupiers shouldn’t get too carried away by the figures.

Richard Lowe, a retail and wholesale analyst at Barclays, believes this is good news for retail commercial properties. He said; “The tide may finally be turning for the high street and with unemployment falling, there is certainly a feeling the stability of the past few months is here to stay.”

Howard Archer, of IHS Global Insight, agrees that we may be witnessing a much needed return to growth. “Given the dominant role of consumer spending, it is certainly difficult to equate the 0.8% quarter-on-quarter increase in retail sales in the economy with an economy that is not growing,” he said.

However, Natalie Berg of Planet Retail urges caution, saying; “Wage growth is at just 1.4%, so we are still seeing the ongoing erosion of spending power among consumers.

“While the month of March certainly provided a nice boost for retailers it’s not really an indication of a broader recovery.”

We may have a clearer picture on Wednesday, when figures are due to be released showing whether GDP has grown from January to March. A decline would raise fears of a return to recession, as the fall in the final quarter of 2011 suggested.

David Kern, an economist with the British Chamber of Commerce, stresses that we still have a long way to go. “While a positive GDP figure will help maintain business confidence, we mustn’t be complacent,” he said.


Overall it appears that while spring promises a warmer economic climate, the message from the analysts –like that of the weather forecasters- is; don’t put your winter coats away just yet.

 

 




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