Data released earlier on Thursday by the Office for National Statistics showed that UK’s July retail sales posted a monthly rise of 1.4 percent beating consensus expectations of a 0.2 percent increase.
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Retail sales grew by 5.9% compared with July 2015, the Office for National Statistics said.
The claimant count, including those on Jobseeker’s Allowance, fell by 8,600 to 763,000 in the period after the Brexit vote between June and July.
“July’s jump in United Kingdom retail sales is a major boost to third quarter growth prospects – and occurred despite survey evidence showing consumer sentiment slumping after the vote for Brexit”, Howard Archer, the chief United Kingdom and European economist for IHS Global Insight, said. “The recent fall in the pound will push up the cost of everyday purchases over the coming year, which will eat into (British) households’ spending power”, Leach added in a statement.
Phil Mullis, partner and head of retail and wholesale at top-20 United Kingdom accountancy firm, Wilkins Kennedy LLP, commented: “July was the first full month since the Brexit vote was announced and there was certainly an anxious wait to see how this would affect the overall landscape”.
British unemployment also stayed at a record low in June, but a huge impact is still expected from the Brexit in the medium-term, with unemployment set to soar as high as 6.5%. Salaries excluding bonuses rose by 2.3% in the three months to May.
“Brexit uncertainty is not going to fade anytime soon so we unfortunately expect the unemployment rate to rise steadily through 2017”, he warned.
But the long-running GfK survey – Britain’s main consumer morale gauge and generally a decent indicator of future household spending over the years – suffered its sharpest drop since 1990 last month.
Ruth Gregory, a Capital Economics economist, said she was not surprised by the relative resilience in spending given such fundamentals as low interest rates, low inflation and a strong jobs market.
Nationally average earnings increased by 2.4% in the year to June, 0.1% up on the previous month.
The survey is well above economist’s estimates of a 0.1% rise in July.
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“It seems that businesses remain confident and this is certainly a sentiment we’ve seen echoed in our own data, which found that nearly half (44%) of United Kingdom businesses say that Brexit won’t affect the number of people they hire”.
