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UK retail sales rally more than expected
UK retail sales increased more than expected last month, thanks to boosts from warmer weather, the royal wedding and FA Cup, the Office for National Statistics said.
Retail sales rose 1.3% month-over-month in May, beating the 0.5% the month before and lower than the 2.4% expected. But compared to last year, retail sales were up 3.9%, ahead of the 2.4% consensus estimate.
Excluding fuel, sales were up 1.3% on the month versus the 0.3% expected and up 4.4% on the year compared to 2.5% forecast.
Overall growth was boosted by sharp increases in sales of clothing, sporting goods and garden items, up 1.7%, 3.3% and 6.2% month-to-month, respectively.
The increasing online shift was highlighted as the proportion of online spending in clothing stores has grown at a much faster rate in the last 14 months, accelerating to 17.6% from 14.7% in March 2017.
Non-store retailing showed strong growth in the quantity bought when compared with the previous year at 16.2%, the previous month at 4.5% and in the three months to May at 4.9%.
"The jump in retail sales in May has all the hallmarks of a weather-related blip, rather than a sustainable pick-up in spending," said economist Sam Tombs at Pantheon Macroeconomics, noting that average temperatures were 1.8 degrees above their 1970-to-2016 May average, persuading households to purchase items that they forewent in February and March when the weather was unusually cold.
"The average level of non-food sales in the first five months of 2018 is exactly the same as in the last five months of 2017, so the underlying trend in sales still looks pretty flat. Non-food sales likely will mean-revert in June, dragging overall volumes down. Food sales likely will weaken in June too, given that supermarkets attributed some of the 1.1% month-to-month rise in sales volumes to the good weather, while motor fuel sales volumes also will struggle in response to the jump in pump prices."