Retail sales rebound in February
Retail sales rebound in February
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Thursday, 16, Mar 2006 12:19
Retailers enjoyed a stronger February but overall sales levels remain subdued, new official figures reveal.
According to the Office for National Statistics (ONS), retail sales rebounded 0.5 per cent last month, with both food and non-food retailers reporting an upturn following a 1.6 per cent fall in January.
Sales volumes were 2.1 per cent higher than during February 2005, meaning that sales growth in the three months to February stood at 1.3 per cent, 0.5 per cent stronger than during the previous quarter.
Non-food retailers reported the strongest growth last month, with sales up 0.6 per cent, boosted by a three per cent rise in clothing sales, while food stores reported a 0.5 per cent sales increase.
However, sales of household goods remained subdued as a result of the continued sluggishness of the housing market, falling by 1.1 per cent.
Internet retailers continued to buck the overall subdued trend, with sales by non-store retailers up 3.4 per cent in the three months to February, the highest growth recorded by the sector since July 2004.
Despite the modest rebound in February, Howard Archer, chief UK economist at analyst Global Insight, believes that the Bank of England's prediction of a retail upturn in 2006 is over-optimistic.
"The February retail sales data does little to dispel our significant doubts over the Bank of England's expectation that 'steady expansion' in consumer spending will occur over the coming months," he said.
"We expect spending will be largely muted for some time to come as the consumer faces a number of significant headwinds. These include a weakening labour market, moderate earnings growth, markedly higher utility bills, increasing council tax payments, elevated debt levels and rising pension concerns."
Nevertheless, the ONS' retail sales figures will make more encouraging reading for the Bank than the Confederation of British Industry's February Distributive Trades Survey, which showed that 40 per cent of retailers reported falling sales last month, with just 22 per cent seeing sales volumes rise, a net balance of minus 18.