UK retail sales surge past pre-Covid peak in July
August 21 2020 09:43 PM
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Employees of Apple serve customers as they stand in line outside the company’s store on Regent Stree
Employees of Apple serve customers as they stand in line outside the company’s store on Regent Street in London. The unexpectedly robust retail sales figures showed the strength of consumer demand in the UK even as other parts of the economy are struggling to recover from recent hefty losses.

Reuters /London

British retail sales surged past their pre-coronavirus level in July, the first full month that shops selling non-essential goods were open since the country went into lockdown in March.
The unexpectedly robust retail sales figures showed the strength of consumer demand even as other parts of the economy are struggling to recover from recent hefty losses.
Retail sales volumes rose by 3.6% from June — above all forecasts in a Reuters poll of economists — and were 1.4% higher than in July 2019, the Office for National Statistics said.
That represented a sharp recovery from double-digit falls in April and May.
Compared with February, before Britain was broadly affected by the pandemic, sales were 3.0% higher.
“This uptick in retail consumption may help ease concerns over the fragility of the UK economy — but not for long,” Alistair McQueen, head of savings and retirement at Aviva, said.
Britain’s retail sector has enjoyed a much faster bounce back than almost all other parts of the economy hit by the coronavirus lockdown.
But there have been contrasting experiences for different types of retailer.
Supermarkets and other food shops have benefited as British people eat at home more.
Online sales have boomed, and household goods stores have seen strong demand.
Other areas have suffered, with clothing and footwear sales still 25% down on a year ago.
Meanwhile, the recovery among British businesses from the shock of the Covid-19 pandemic quickened again in August, but snowballing job cuts sent an ominous signal for the months ahead, a survey showed yesterday.
The early reading of the IHS Markit/CIPS UK Composite Purchasing Managers’ Index (PMI), covering the services and manufacturing sectors, shot up to a nearly seven-year high of 60.3 from 57.0 in July, far above the 50 threshold for growth.
A Reuters poll of economists had pointed to a reading of 57.1.
While the PMI indicated a further acceleration of growth, it did not signal a return to normal levels of output across businesses, which some economists think could take years.
“There were encouraging signs that customer-facing service providers have started to catch up with the rebound seen earlier this summer across the wider economy,” said Tim Moore, economics director at IHS Markit, which compiles the survey.
He cited a further easing of lockdown measures and the government’s “Eat Out to Help Out” scheme, which subsidises restaurant meals, as helping to boost growth during August.
Nonetheless, there were widespread worries among companies that the recovery might fade in the coming months, with the government’s job protection scheme set to close at the end of October.
The PMI showed companies in both the services and manufacturing sectors cut jobs at a faster pace in August - echoing the almost daily announcements of lay-offs among many of Britain’s biggest companies.
Economists polled by Reuters this month thought it would take at least two years for Britain’s economy to recover the output lost during the pandemic, with a contraction of almost 10% in store for 2020.
The PMI for the services sector, which comprises the bulk of Britain’s economy, rose to a six-year high of 60.1 in August from 56.5 in July - again better than expectations for a reading of 57.0.
Still, business expectations for the year ahead cooled slightly as companies fretted over the outlook.
Factories reported a better August too. The manufacturing PMI rose by two points to 55.3, its highest level since February 2018.



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