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UK Retail Sales Improves, Private Sector At All Time High

April 26, 2021 by Sanya Dot

The partial reopening of Britain’s locked down economy has stimulated the fastest private sector growth in more than seven years. This is according to a closely watched monthly update of the economy.

The Rise in Retail Sales

A report on the state of the UK’s two biggest sectors, the services, and manufacturing sectors, showed both booming in April and prompted immediate speculation of a spring spurt inactivity.

The release of the IHS/Markit purchasing managers’ index came after official data showed strong growth in retail sales in March. This was when most of the lockdown restrictions imposed to halt the spread of the COVID-19 pandemic were still in force.

The overall PMI rose from 56.4 in March to 60.0 in April, which is well above the 50 cut-off levels, showing whether the economy is growing or contracting.

Service sector business activity rose from 56.3 to 60.1, while manufacturing output rose from 56.6 to 59.1.

Markit’s chief business economist, Chris Williamson, said it was the strongest showing in the 23-year history of the PMI other than a four-month period between August and November 2013.

“Companies are reporting a surge in demand for both goods and services as the economy opens up from lockdowns.”

“Also, the encouraging vaccine rollout adds to a brighter outlook,” Williamson said.

“Business activity should continue to grow strongly in May and June as virus restrictions are eased further.”

“Thus setting the scene for a bumper second quarter for the economy.”

Williamson said that while tougher post-Brexit trading conditions were still holding back exports, the strength of the survey was good news for the jobs market.

“With optimism about the year ahead continuing to run close to March’s all-time high, firms have been encouraged firms to take on extra staff at a rate not seen for over three and a half years.”

COVID-19’s Contribution to Retail Sales

In March, the office for National Statistics said that retail sales rose by 5.4% because of the modest relaxation of the curbs imposed across the UK to stop the spread of Covid-19.

The increase was well above the 1.5% predicted by City economists. Sales were 1.6% higher in March than before the pandemic began to impact the economy in February 2020.

As consumers anticipated the chance to go out again, sales of clothes were solid, rising by more than 17% in March.

The easing of travel restrictions towards the end of the month led to an 11% increase in fuel sales.

Darren Morgan, the director of economic statistics development at the ONS, said retail sales had continued their recovery after a subdued start to the year.

In the first quarter of 2021, with all but essential stores closed, sales were almost 6% lower.

This is lower than in the final three months of 2020

“Specialist food stores, such as bakers and butchers, saw increased sales as the continued closure of hospitality.”

“They also saw customers buying produce for Easter festivities at home,” Morgan said.

“The approaching spring enticed people into garden centers, which had a good month,”

“Meanwhile, clothing sales sprung back to life as people looked to update their wardrobe in anticipation of lockdown easing.

“Fuel sales also recorded a strong month.”

“This is after easing of movement restrictions meant people could again travel further afield.”

Filed Under: Economy

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