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British retail sales rose far more than expected in November and at their fastest monthly pace since the start of 2023, suggesting the sector “turned a corner” with help from Black Friday discounts ahead of the key Christmas period.
The quantity of goods bought in Great Britain grew 1.3 per cent between October and November, the Office for National Statistics said on Friday, after two months of no growth or contraction.
The reading outstripped the 0.4 per cent increase forecast by economists in a Reuters poll, and marked the fastest month-on-month rise since January.
Friday’s retail sales figures are the first official economic data released for November, providing an early indication of the performance of the consumer sector in the run-up to what is traditionally the busiest season for shops.
The strong rise last month suggests some consumer resilience against high prices and borrowing costs helped by store discounts, easing inflation and improving consumer confidence.
It also points to some improvements in the consumer sector after household spending was the main driver of the contraction in the UK economy in the three months to September, according to ONS revisions also published on Friday.
Asif Aziz, retail director at mobile network EE, said that “despite a slow start”, the retail sector had “turned a corner” in November. Boosted by lower price growth and discounts offered as part of the Black Friday shopping event, “consumer confidence has bounced back just in time for the busy holiday shopping season”, he added.
Inflation fell to 3.9 per cent in November from 4.6 per cent in October, a bigger than expected drop, official data showed on Wednesday. Meanwhile, research company GfK found that consumer confidence rose to a three-month high, and for the second consecutive month, in December.
Martin Beck, chief economic adviser to the EY Item Club, a consultancy, said: “November’s retail performance offers some hope that the economy will avoid another decline in gross domestic product in Q4 and a technical recession.”
However, George Moran, economist at the bank Nomura, said that while the data for November suggested some improvement in consumer activity, he expected “December to be weaker to compensate for the strong growth in November”.
Darren Morgan, ONS director of economic statistics, attributed the strong growth in retail sales to “heavy Black Friday discounting”.
He said household goods retailers, clothing shops and department stores all reported robust sales, with stores selling computers, sports equipment, toys and cosmetics benefiting in particular from promotions.
Supermarket sales notched up, but Morgan said specialist food and drinks stores registered the best November because “customers [were] stocking up early for Christmas and spending more than we have traditionally seen at this time of year”,
Sales volumes were broadly unchanged from November last year even as shoppers spent 3.8 per cent more, underscoring the impact of high prices on household finances.
Some economists said they expected rising real wages, the cut to national insurance contributions announced in the Autumn Statement and easing mortgage rates to bolster spending next year.
Gabriella Dickens, economist at the consultancy Pantheon Macroeconomics, said: “We expect households’ real expenditure to rise by about 1.2 per cent next year, with retail sales following a similar trend.”
Source: Economy - ft.com
