British shops sales up on discount offers

British shops recorded only a marginal increase in December sales, driven by deep and widespread discounting, an industry survey showed on Saturday.

Accountancy and business advisory firm BDO said its monthly High Street Sales Tracker (HSST) found sales in British shops rose 0.7% in December compared to the same month in 2018.

It said the weak outcome was despite an additional shopping day at the beginning of Christmas week.

“Black Friday (Nov.29) never quite ended and instead saw sales continue throughout the month,” said Sophie Michael, head of retail and wholesale at BDO.

“January tends to be a positive month as people are more inclined to spend in the sales normally, however it’ll be interesting this year to see if many have already done their bargain-hunting in December,” retailing experts said.

In contrast, online sales in December increased 24.5% year-on-year. Although that was the best monthly performance since December 2013 it was boosted by Cyber Monday falling six days later than it did last year.

BDO’s survey made no mention of any impact on sales from Britain’s Dec.12 election which saw Prime Minister Boris Johnson secure a commanding parliamentary majority. Clothing retailer Next kicked off the Christmas trading update season on Friday, reporting better-than-expected sales and raising its full year profit guidance.

A host of British retailers will report next week, including the UK’s biggest player Tesco, along with Sainsbury’s, Morrisons and Marks & Spencer’s.

British consumers increased their borrowing in November at the slowest rate in more than five years and the construction industry’s decline worsened in December, figures showed on Friday, adding to signs of an economy that stalled late last year. The Bank of England said growth in unsecured consumer lending slowed to 5.7% in the 12 months to November - ahead of last month’s election - the smallest increase since June 2014. Credit card repayments exceeded borrowing for the first time since July 2013. Household spending has helped Britain’s economy through its Brexit slowdown.

But some BoE officials are concerned that record levels of employment and a recovery in wage growth might be on the turn, raising questions about consumer spending ahead. Investors are watching for signs of the impact of Prime Minister Boris Johnson’s emphatic election victory on Dec. 12.

 For now, most gauges of the economy look downbeat. The construction industry’s downturn deepened in December, driven by the sharpest drop in civil engineering activity since 2009, an IHS Markit/CIPS survey showed.

“Construction companies will be hoping that the government’s planned sharp stepping up of investment in infrastructure feeds through as quickly as possible to boost activity,” said economist Howard Archer from the EY ITEM Club consultancy.

While the outlook for 2020 looks uncertain amid a stuttering global economy and rising tensions in the Middle East, some of the BoE data hinted at better times ahead for Britain, economist Samuel Tombs from Pantheon Macroeconomics consultancy said. “November’s monetary indicators imply that GDP growth likely will regain some momentum in the first half of this year,” he said, citing a rise in the money supply of households.

The BoE data chimed with other signs that the housing market is stabilising after slowing through most of 2019. The number of mortgages approved for house purchase edged up to 64,994 in November from 64,662 in October, compared with the consensus forecast of 64,450 in a Reuters poll of economists.

Reuters