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UK clothing retail sales volume picking up in April

YarnsandFibers News Bureau 2015-05-22 11:00:00 – London

British clothing retail witnessed rise in sales volumes in April by a stronger-than-expected 1.2 percent from March as consumers took advantage of falling prices and unusually warm weather encouraged shoppers to buy new clothes. It is the biggest monthly increase since November, according to the Office for National Statistics. Annual sales growth picked up pace to 4.7 per cent.

The pound jumped to its highest level in two months against the euro and strengthened by one percent against the dollar.

This robust April reading is a great springboard to a strong second-quarter gross domestic product reading, said Alan Clarke, an economist at Scotiabank. Quarterly growth in the April-June period could accelerate to one percent after slowing to 0.3 percent in the first three months of 2015, he added.

Some of the sharp increase in sales was due to a surge in purchases of clothing, textiles and footwear, which jumped by 5.2 percent in April from March, the biggest monthly rise in four years though one which might prove to be a one-off boost.

An ONS official said that they’ve had warmer than average weather which has led to consumers bringing forward purchases of summer clothing.

Excluding fuel, sales were also up by 1.2 per cent in monthly terms and by 4.7 per cent compared with April last year.

A drop in fuel sales in March, when oil prices showed some recovery from their previous slump, had caused overall retail sales in that month to plunge by 0.7 per cent. By contrast, fuel sales in April rose two per cent from March, the ONS said.

Britain’s consumers have been the main driver of the country’s economic recovery which began in 2013. A fall in inflation, which turned negative in April for the first time since 1960, and a pick-up in wages have helped restore some of the spending power lost in the years after the financial crisis.

Manufacturers are having a tougher time than retailers. A monthly survey by employers group CBI showed factory orders slowed to their lowest level in seven months in May although companies remained optimistic about the short-term outlook as the eurozone shows signs of recovery.

Elizabeth Martins, an HSBC economist said that the strong retail sales numbers suggested consumers were finally starting to respond to the boost in spending power brought by last year’s slump in oil prices and a recent tentative pick-up in wages.

Barclays head of retail & wholesale Richard Lowe said that the high street has a lot to feel positive about.

With the spectre of the general election banished, retailers are hopeful that consumers will make the most of recent falls in the cost of living, and spend.

The longer-term outlook also remains bright. Retail sales, which hit £325bn last year, are expected to rise to £351bn within the next five years and £391bn by 2024.

But Asda, the British arm of US retailer Wal-Mart, reported its worst quarterly sales in more than five years on Tuesday and its chief executive said that customers were not yet cash-confident.

Despite the strong headline volume growth figures, there are still tough times ahead on the high street.

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