Some good news for Britain’s retailers as retail sales figures for July, the first hard data announced in this area since the EU Referendum, showed they were better than expected.
Sales rose 1.4% compared to June and were up 5.9% on July last year. The main contribution to this growth was once again from non-food stores
This was the latest in a series of important economic releases [in the week beginning 14th August] in the UK. Jobs data for the April to June period also showed no impact from the uncertainty in the run up to the Referendum.
The unemployment rate remained at 4.9%, as expected, while the claimant count in July actually fell by 8,600 which was better than expected. Average earnings grew by 2.4% including bonuses, which was in line with market forecasts.
The Office for National Statistics reported that inflation in the year to July ticked up slightly from 0.5% to 0.6%. That was higher than expected with the main contributors being motor fuels, alcoholic drinks and accommodation services. Food prices fell less than at the same time a year ago.
With the fall in the pound following the Referendum, economists are expecting to see further rises in inflation fuelled mainly by the increase in the cost of imports. There was some indication of that in other data that week as input prices for manufacturers rose 4.3% in the year to July.
Overall, the data was better than many expected or feared. It certainly shows that concerns about a big economic slowdown in the run-up to the Referendum were overdone, and there are indications that consumers have not significantly changed their behaviour in the first weeks following the Referendum.
Of course, it is still too early to make firm judgements about the impact of Brexit and formal negotiations with the EU have not yet begun, but investors should appreciate that this data is encouraging.
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