UK retail sales rise exceeds expectations

There is more good news on the UK economy as official figures released today showed a strong recovery in retail sales in September.

Sales volumes increased 0.6 per cent in September after a surprise 0.8 per cent fall in August, data provided by the Office for National Statistics showed.

The surge came on furniture sales, which offset weak sales at supermarkets.

 According to the ONS, furniture stores reported a strong month, suggesting momentum in the UK's housing market might be feeding through to the sector, with household goods stores growing volumes by 3 per cent.

Sales volumes at supermarkets were down 0.2 per cent during the month, after a 2.5 per cent slump in August.

According to commentators, the better-than-expected retail performance would bolster the outlook for overall economic growth in the third quarter, which was expected to surpass the second quarter rate of 0.7 per cent.

However, job figures yesterday showed that the labour market response to renewed growth continued to be sluggish, with the UK unemployment rate holding steady at 7.7 per cent while the number of Jobseeker's Allowance claimants declined sharply.

According to statisticians, the fall in supermarket sales volumes was largely driven by slumping sales of household goods rather than food.

Rising house prices, record low mortgage rates and hopes of economic recovery had given consumer spending a boost with the hot summer helping prompt heavy spending in July before shoppers start tightening their purse-strings in August.

Food sales that surged in the July heat wave were down for a second month in September.

With wage growth under pressure from inflation, the sustainability of the trend of rising consumption had been questioned by economists.

Store price inflation was down to an annual 0.9 per cent in September, the slowest pace since April and down from 1.6 per cent in August.

Retailers, however, continued to be wary about the outlook for their businesses with Tesco and Sainsbury's, in recent weeks, highlighting how consumers' disposable income continued to fall.

According to data released yesterday, average weekly earnings growth, including bonuses, slowed to 0.7 per cent in the three months to August as against a year earlier.

A British Retail Consortium survey showed retail sales recorded their second-weakest performance in September this year even with retail market research specialist Verdict on Monday forecasting UK retailers were set to enjoy their best growth in Christmas sales since the financial crisis.

The retail sector constitutes just under 6 per cent of the UK economy.