By Julia Kollewe
LONDON (MktNews) - UK retail sales volumes are likely to have risen strongly in January, analysts said Wednesday.
A median calculated from a survey by Market News sees retail sales in January rise by 0.6% on the month, which would still take the annual rate down to 3.0% from 4.4% the previous month because of very strong sales growth a year earlier. Forecasts range between monthly increases of 0.3% and 1.3%.
Retail sales in December were weaker-than-expected but the underlying growth pattern still looked relatively robust. Although sales only rose by 0.1% in December, sales in the fourth quarter as a whole were still up 1.3% on the previous quarter and up 4.4% on a year earlier. Analysts said the survey evidence mostly points to a healthy outturn for the official retail sales data. The Confederation of British Industry's distributive trades survey was very upbeat while the British Retail Consortium's monthly sales monitor was somewhat weaker. John Lewis sales were also fairly strong and consumer confidence rose in January according to GfK.
The Confederation of British Industry's distributive trades survey showed retail sales volumes soaring in January to reach the fastest rate of growth since May last year. The reported sales balance shot up to 36% from 16% in December (and compared with 29% in January last year). This would point to around monthly sales growth of something in the region of 0.6%.
Meanwhile, the British Retail Consortium's sales monitor showed the like-for-like sales balance falling to 2.9% from 3.4% in December. But it should be noted that the figures were artificially depressed by one less trading day compared with January 2000. This could point to monthly growth of around 0.3% to 0.4%, according to Michael Hume, UK economist at Lehman Brothers.
"So far at least, the generally bullish survey evidence suggests that retailers may indeed have recovered some lost ground" from December, said Jonathan Loynes, UK economist at CapitalEconomics.
Analysts also noted the chunky 1.1% increase in notes and coin in January which supports the strong picture.
However, the strong retail sales number in January last year means that the annual rate will still fall even if sales growth in January rises by 1.3% -- the top forecast in the MNI survey.
The retail sales data will be released on Thursday, February 25, at 09:30 GMT.