UK shopping, house prices and hiring rise in post-election pick-up - GulfToday

UK shopping, house prices and hiring rise in post-election pick-up


Shoppers walk past on Oxford Street in London. Reuters

British shoppers, home-buyers and employers grew more upbeat last month, as reports of the biggest rise in high-street sales since 2014 and the largest increase in house prices in nearly two years added to signs of a post-election bounce.

However, there were warnings that the upturn might not last and instead reflected a temporary blip after political uncertainty around Brexit and December’s election weighed on activity for much of the final quarter of 2019.

Accountancy firm BDO said its monthly gauge of the high street found sales jumped by 5.7% last month, the biggest annual rise since January 2014, with gains across all sectors.

Until now there has not been a clear sign of a post-election improvement in the mood of consumers similar to the increase in confidence among businesses.

BDO warned that the January sales surge might not last, as retailers were sitting on high levels of stock and purchase orders had fallen again, suggesting discounting was driving sales.

“This may be a false dawn in terms of a high street recovery,” Sophie Michael, a partner at BDO, said.

Last week the Bank of England held off from cutting interest rates, despite stagnation in the economy in late 2019, to see if signs of a recovery since Prime Minister Boris Johnson’s election win persisted.

Halifax, part of Lloyds Banking Group and one of Britain’s biggest mortgage lenders, reported that house prices rose at their fastest annual rate since February 2018 last month, up by 4.1% after a 4.0% rise in December.

But it gave a similar warning to BDO on Friday about whether the increase would be lasting.

“It’s too early to say if a corner has been turned,” Halifax managing director Russell Galley said. “The recent positive figures may actually represent activity that would ordinarily have been expected to take place last year, but was delayed by economic uncertainty.” Employers remain upbeat, suggesting that there should be some resilience to consumer demand.

The index of permanent job placements from the Recruitment and Employment Confederation hit its highest level since December 2018 at 52.3, up from 51.9 in December. “It’s good to see that businesses have grown in confidence over the past two months and taken the opportunity to restart hiring,” REC chief executive Neil Carberry said.

But there were less positive signals in the REC survey too.

Starting salaries for permanent staff grew at the slowest rate since July 2016, immediately after the Brexit referendum.

The REC report also showed temporary staff hiring fell for the first time since 2013, possibly reflecting concerns about reforms aimed at tackling tax avoidance that are likely to affect temporary workers.

Separately, Jaguar Land Rover will reduce or stop production on certain days at two of its British factories over the next few weeks as Britain’s biggest carmaker pursues cost-cutting measures in response to falling demand.

JLR posted a 2.3% drop in retail sales in the three months to the end of December and has targeted billions of pounds worth of savings to tackle falling diesel demand in Europe and a tough sales environment in China.

The firm will halt production on selected days over a four-week period from late February at its Castle Bromwich factory in central England and stop production on some half or full days at its nearby Solihull facility until the end of March. “The external environment remains challenging for our industry and the company is taking decisive actions to achieve the necessary operational efficiencies to safeguard long-term success,” the company said in a statement.

“We have confirmed that Solihull and Castle Bromwich will make some minor changes to their production schedules to reflect fluctuating demand globally, whilst still meeting customer needs.”

The move is not connected to coronavirus, a spokeswoman said, which prompted Fiat Chrysler to warn on Thursday that a European plant could shut down within two to four weeks if Chinese parts suppliers cannot get back to work.


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