April Showers, April Shine?

April has finally seen a rise in the amount of sales expected for the first time since the UK went into a recession, increasing by 0.9% according to the Office for National Statistics.

Analysts had only expected a 0.5% increase after interest rates were cut by the same amount in March, meaning that mortgage holders monthly bills were lowered.

The British Retail Consortium had already revealed that April sales had increased.

The ONS say that compared to last April, sales had increased this year by a total of 2.6%. But analysts still believe that we aren’t out of the woods yet, warning that sales could fall back again as 2009 continues because of the rising unemployment level.

Sceptical

Analysts are generally pleased with the increase in sales, though some are a little sceptical about the figures as it is the first time since the ONS changed its survey methodology after previous criticisms that figures didn’t tally with other retail spending studies.

The chief economist of Insinger de Beaufort, Stephen Lewis said: “The retail sales figures confirm the trend which came through from the British Retail Consortium report a few days ago.

“They [retail figures] are always a surprise, and even with the new method they seem to be throwing up figures which many people feel may be on the firm side of what they would expect.”

According to the ONS, footwear and clothing sales in particular were strong, and many department stores saw their highest year-on-year performance since February last year (2008).

The ONS did however say that overall, the picture remains “mixed” as some sales, for example, household goods, are still falling.

Will Unemployment Continue To Take Its Toll?

Textiles, clothing and footwear sales increased by 11.9% last month, and food stores also noticed an increase of 0.5% in sales, but household good sales did fall by 8%.

“The High Street has enjoyed a decent bounce in spending lately,” confirmed Vicky Redwood from Capital Economics.

“It’s therefore looking increasingly likely that there has been a more fundamental improvement in sales, perhaps related to the pick-up in disposable incomes caused by falling inflation and interest rates,” she added.

But, she concluded: “we remain doubtful that this is the start of a sharp or sustained consumer recovery.” Warning that the continued rise in unemployment is actually likely to drag future sales down.

What Do You Think?

Are things starting to look up for sales and the economy in general, or do we still have a long way to go? We would love to know your thoughts and opinions. Leave your comments here.