British retail sale stagnate
Retail sales across Britain stalled in March, as the cost of living squeeze continues to hit spending, new data shows.
The Office for National Statistics has just reported that British retail sales volumes stagnated in March, following modest growth of just 0.1% in February (revised up from stagnation).
Thatâs weaker than expected; economists polled by Reuters had expected sales growth of 0.3% in March.
While spending on motor fuel and non-food goods rose, there was a drop in spending at department stores, on food, and online.
On an annual basis, sales volumes rose 0.8% over the year to March 2024, weaker than the 1% expected.
That leaves them 1.2% below their pre-Covid-19 level in February 2020.
ONS senior statistician Heather Bovill says:
âRetail sales registered no growth in March. Hardware stores, furniture shops, petrol stations and clothing stores all reported a rise in sales. However, these gains were offset by falling food sales and in department stores where retailers say higher prices hit trading.
âLooking at the longer-term picture, across the latest three months retail sales increased after a poor Christmas.â
Key events
Airline shares drag FTSE 100 down
Shares are dipping in Europe as traders digest events in the Middle East overnight.
In London, the FTSE 100 blue-chip share index is down 38 points or 0.5% at 7838 points.
IAG, the parent company of British Airways, is the top faller, down almost 4%, followed by easyJet (-2.5%).
Engineering firm Rolls-Royce, which makes and services jet engines, are down 1.7%.
European markets are also lower, with the pan-European Stoxx 600 down 0.6%.
Retail recession is over, says Capital Economics
Although sales volumes (the amount of stuff people bought) were flat in March, the first quarter of 2024 has been a brighter time for retailers than the last quarter of 2023.
Sales volumes increased by 1.9% in the three months to March 2024 when compared with the previous three months, the ONS reports.
That brings the retail recession to an end, declares Capital Economics this morning.
Alex Kerr, their assistant economist, explains:
Despite the softer-than-expected data, retail sales still added almost 0.1 percentage points to real GDP growth in Q1. Moreover, the prospect of interest rate cuts and the boost to real household incomes, from falling inflation and the 2p cut to national insurance in April, suggest the recovery in consumer spending will continue throughout this year.
Automotive fuel sales volumes rose to their highest level since May 2022 in March, todayâs retail sales report shows.
Retailers told the ONS this rise was linked to increased footfall on their forecourts.
Marchâs retail sales stagnation is âdisappointingâ, says Nicholas Hyett, Investment Manager at Wealth Club, commented:
âRetailers had a gloomier March than many expected, and overall sales remain 1.2% below their pre-covid peak.
Department stores remain an area of particular weakness, not good news for John Lewis which announced it would not be paying its regular staff bonus for the second year in a row during the month. However, high street shops more broadly have actually performed better, itâs food retail and online shopping that have held back growth.
The disappointing numbers will fuel speculation that the Bank of England will consider interest rate cuts this summer, though are not poor enough to necessitate a move.
British retail sale stagnate
Retail sales across Britain stalled in March, as the cost of living squeeze continues to hit spending, new data shows.
The Office for National Statistics has just reported that British retail sales volumes stagnated in March, following modest growth of just 0.1% in February (revised up from stagnation).
Thatâs weaker than expected; economists polled by Reuters had expected sales growth of 0.3% in March.
While spending on motor fuel and non-food goods rose, there was a drop in spending at department stores, on food, and online.
On an annual basis, sales volumes rose 0.8% over the year to March 2024, weaker than the 1% expected.
That leaves them 1.2% below their pre-Covid-19 level in February 2020.
ONS senior statistician Heather Bovill says:
âRetail sales registered no growth in March. Hardware stores, furniture shops, petrol stations and clothing stores all reported a rise in sales. However, these gains were offset by falling food sales and in department stores where retailers say higher prices hit trading.
âLooking at the longer-term picture, across the latest three months retail sales increased after a poor Christmas.â
S&P cuts Israel’s credit rating on heightened geopolitical risk
Last night, ratings agency S&P Global lowered Israelâs credit rating, before the reports of explosions in Iran.
S&P cut Israelâs long-term ratings to A-plus from AA-minus, citing Heightened Geopolitical Risk, and left its outlook on negative.
S&P says:
âWe forecast that Israelâs general government deficit will widen to 8% of GDP in 2024, mostly as a result of increased defense spendingâ
S&P Global predicts that a wider regional conflict will be avoided, but that the Israel-Hamas war and the confrontation with Hezbollah appear set to continue throughout 2024.
Asia-Pacific stock markets are a sea of red today, after Israel carried out military operations against Iran.
Japanâs Nikkei share index has shed 2.3%, or 883 points, to 37,196, away from the record high set last month.
Chinaâs CSI 300 is off 0.8%, and South Koreaâs KOSPI is down 1.9%.
Introduction: Oil jumps after Iran explosions
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Reports of powerful explosions in Iran overnight have pushed up the oil price, as investors fear escalation in the Middle East crisis.
Brent crude surged back over $90 amid reports of explosions near the Iranian city of Isfahan, with US officials confirming that Israel has carried out military operations against Iran.
Oil jumped on fears that the conflict had entered a new phase, while stocks fell.
Stephen Innes, managing partner at SPI Asset Management, says:
Reports of an Israeli aerial bombardment targeting a key nuclear facility in central Isfahan have sparked a significant shift out of risk assets and into safe-haven investments.
Metal and soft commodity prices â such as wheat, soybeans and corn – also rose, on fears of shipping disruption and higher energy input costs.
Higher oil and food prices, and shipping costs, would add to inflation, undermining efforts to bring the cost of living crisis under control.
But⦠markets are calming down somewhat, with Brent crude now easing back to $89/barrel (up 2% today) as Iran appears to play down the incident.
A senior commander of Iranâs Army Siavosh Mihandoust has said that no damage was caused in the overnight attack, according to state TV, adding that the noise heard overnight in Isfahan was due to air defence systems targeting a âsuspicious objectâ.
Diplomat Carl Bildt, co-chair of the European Council on Foreign Relations, says this is important, and that the key is to break the dangerous cycle of escalation.
Our brilliant Middle East Crisis liveblog has all the details:
Also coming up today
Some lenders to Thames Water are facing the prospect of losing up to 40% of their money if the troubled supplier is nationalised, with much of its £15.6bn debt ending up on the public books.
The Guardian revealed last night that a government blueprint, codenamed Project Timber, is being drawn up; it would turn Britainâs biggest water company into a publicly owned armâs-length body.
Some lenders to its core operating company could lose up to 40% of their money under the plans, which which is at an advanced stage. More here:
Thereâs also excitement in the crypto currency world, where bitcoin is about to undergo a halving. This will cut the rewards for bitcoin miners in half, to reduces the pace at which new bitcoins enter the market.
The agenda
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7am BST: UK retail sales for March
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2pm BST: IMF/World Bank Spring Meeting continues in Washington DC
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3.15pm BST: Bank of England deputy governor Dave Ramsden on panel about lessons to learn from post-pandemic inflation