UK Retail Sales Miss Expectations

UK Retail Sales Miss Expectations

UK Retail Sales fell well shy of expectations this morning, declining 0.7% on a monthly basis over October.

With the market consensus pointing to a -0.3% print, the ONS noted that retailers cited uncertainty around the budget as a leading factor behind the fall in sales. The report also describes how “low consumer confidence” affected sales.

October’s figures marked the lowest print in four months and follows September’ marginal expansion of 0.1%. On an annual basis, the index rose 2.4% again missing forecasts of 3.4%. When compared with their pre-coronavirus (COVID-19) pandemic level in February 2020, volumes were down by 1.5%.

When compared with their pre-COVID-19 levels, volumes were down by 1.5%.

With the UK’s retail sector accounting for ￡112.8 billion of economic output in 2023 (or around 4.9% of the country’s GDP), today’s figures reveal the scale of the challenges still facing this major part of the economy.

As we looked at previously, a recent document published by the House of Commons Library highlighted how longer-term challenges facing the retail sector have been exacerbated by the pandemic and cost of living crisis. Here, it cited research from the Centre for Retail Research which said that the retail industry has been subject to a “permacrisis” since the 2008 financial crisis.

Firstly, the Centre for Retail Research said that “Rapid debt-fuelled expansion of shops in the 2000s” had “pushed city centre rents to astronomical levels.” This meant that high rental costs put considerable pressure on profit margins which amongst other things meant that there was “low investment in stores and weak forward planning to meet the challenges of the new retailing”.

While challenges facing the UK retail sector was highlighted in the State Opening of Parliament, key figures such as the Chief Executive of the New West End Company which works with over 600 business said that “thorny issues” such as a “much-needed business rates reform” and “a review of tax-free shopping” was needed.

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Russia Fire “New” Weapon Against Ukraine

Overnight, Russian President Vladimir Putin announced on state TV that Moscow launched a “new” intermediate-range ballistic missile against Ukraine. Exact details remain unclear with Ukraine saying that they believe the weapon was an intercontinental ballistic missile (ICBM). The US reject this, with one official informing the BBC that Washington believes that it was was an experimental medium-range ballistic missile.

According to the BBC, Russia have fired some 12,000 missiles against Ukraine with around 80% being intercepted. With such a high interception rate, Russia’s use of more powerful missile systems is a clear indication that Moscow is seeking to address the issue.

Western leaders have condemned the attack, maintaining that it is yet another example of Russian escalation in the conflict.

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Today’s Data

Following the release of this morning’s UK retail sales print, attention will now turn to the release of PMI data throughout the course of the day. This will include Eurozone PMIs at 0900, ahead of UK PMI’s at 0930 and US PMIs at 1445.