UK Retail Recovery Continues

The UK economy continues to show signs of green shoots following a fourth consecutive month of retail sales growth. Figures compiled by National Statistics showed a 0.8% increase in sales over August, outperforming the 0.7% consensus and pushing GBP immediately higher.

The clothing and footwear sector received a welcome boost following the re-opening of schools across the country, whilst computing sales also grew as more businesses adopt permanent remote working functions and students return to university.

Online retail continued to thrive, growing 72.4% on a like-for-like basis over August according to the latest BDO High Street Sales Tracker (HSST). The performance was underpinned by a continued surge in online purchases since the Covid-19 pandemic struck, with online non-food sales up by 42.4%.

Conversely, food shopping recorded its weakest performance of the year as the re-opening of restaurants and bars, combined with the “Eat Out To Help Out” scheme, drove consumers out of their homes and back to the high-street.

Elsewhere, the pound fell sharply yesterday afternoon following a surprisingly dovish tone from the Bank of England. Despite holding both its current interest rate levels and quantitative easing program, minutes from Septembers meeting highlighted discussions on how it could implement negative interest rates if needed. The bank also echoed a similar sentiment to the Federal Reserve regarding inflation,  further reducing the likelihood of interest rate hikes in the near-to-medium term.