Retail sales were much stronger than expected in September, with sales volumes increasing by 0.6% m/m in September (BarCap: 0.1%, consensus: 0.0%) after falling by a downwardly revised 0.4% the previous month. Core retail sales (excluding fuels) rose by 0.7% m/m (BarCap: 0.1%, consensus: 0.2%) from a downwardly revised -0.4% previously. Volumes of sales were supported by strong sales of household goods, while food sales were flat on the month.
Nominal sales continued to increase at a faster pace than real sales, although the gap between the two has closed significantly in recent months. On the value measure, headline sales increased by 0.8% m/m and core retail sales increased by 0.9%.
Despite the stronger than expected monthly growth rates for September, we would point out that the less volatile 3m/3m measures continued to report subdued conditions with total sales falling by 0.2% and core sales falling by 0.1%. Faced with depressed domestic demand retailers have not succeeded in boosting sales significantly even as discounts have become more frequent. Looking ahead we do not think the recent strong growth in monthly sales is likely to be sustained and the environment for retailers is likely to remain challenging as consumer spending remains depressed driven by low confidence and slow earnings growth.
BARCLAYS CAPITAL
ECONOMICS RESEARCH | INSTANT INSIGHTS