LONDON — UK retail sales had a huge month in February, confounding the forecasts of economists who had predicted stuttering growth in the month, according to the latest data from the Office for National Statistics.
On a month-to-month basis, sales grew by 1.4% in February, while on an annual basis, sales grew by 3.7%. Both numbers were significantly worse than had been expected by economists polled in the run up to the data.
Prior to the release, economists had forecast month-on-month sales growth of 0.4%, with the yearly figure expected at 2.6%.
"February’s retail sales figures show fairly strong growth, though the underlying three-month picture shows falling sales as February's figures follow two consecutive months of decline in December and January. The monthly growth in February is seen across all store types. The underlying trend suggests that rising petrol prices in particular have had a negative effect on the overall quantity of goods bought over the last three months," Kate Davies, a senior statistician at the ONS said.
Here is the ONS' chart showing February's figures as part of the longer term trend:
February's figures break a two-month trend of falling sales after retail sales suffered their biggest drop since April 2012 in December, then saw their worst growth in more than three years in January.
Online sales were a big driver of the increase, climbing "year-on-year by 20.7% and by 3.3% on the month, accounting for approximately 15.3% of all retail spending."
However, while on a monthly basis the numbers were good, the three-month picture is less promising, with the ONS suggested that this figure saw its biggest fall in almost seven years.
"The underlying pattern as suggested by the 3 month on 3 month movement decreased by 1.4% for the second month in a row; the largest decrease since March 2010 and only the second fall since December 2013," the ONS said.
In an email sent shortly after the release, Samuel Tombs of Pantheon Macroeconomics paints a bleak picture of the data, saying:
"Retail sales remain on track to fall by around 1% quarter-on-quarter in Q1, barring an erratic movement in March. Retail sales account for around one-third of total consumer spending, so the latter will provide little—if any—support to GDP growth in Q1. Looking ahead, consumer spending likely will only edge up, given that consumers’ real wages now are falling, employment is growing only modestly and another wave of welfare spending cuts will hit households next month."
Regardless, the pound has surged on the figures, climbing above $1.25, as the chart below illustrates:
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