All the day’s economic and financial news, as UK shoppers tighten their belts and cut back on food
- Latest: Retail sales weaker than expected
- Brits cut back after a summer spending blitz
- Biggest monthly drop in food sales in three years
- WTO’s Azevedo: Trade war would millions of jobs
- Shanghai composite hits four-year low
- Danske money-laundering: New CEO blocked by regulators
Britain’s pub industry is fighting its own battle against rising taxes, which it blames for forcing locals to close.
“Local pubs like my own bring people together and are at the heart of communities. However, mounting financial pressures mean that for many it is already a struggle just to keep their doors open.
“I am at Downing Street today to deliver the Long Live the Local petition because, along with 105,000 other people, I believe the Chancellor must act now to protect our local pubs.
Heads-up for UK travellers: Cypriot airline Cobalt cancelled all its flights and indefinitely suspended operations, after failing to agree a new funding package.
So if you were due to fly Cobalt from, say, Heathrow, Stansted, Gatwick and Manchester, I’m afraid there’s no point heading to the airport.
Domino’s Pizza hasn’t been caught up in the retail slowdown.
“Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter.
Here’s our economics editor Larry Elliott on today’s retail sales figures:
A strong summer for Britain’s retailers came to an abrupt end in September as weaker demand for food dragged down spending overall.
The latest snapshot of spending from the Office for National Statistics showed that the volume of sales for shops and online businesses dropped by 0.8% – a bigger monthly fall than analysts had been expecting.
Andrew Westbrook, head of retail at audit, tax and consulting firm RSM, reckons some retailers have been slashing prices, to shift stocks:
There continue to be signs of distress on the high street, with deep discounting evident in some stores. The big rise in the sales of watches and jewellery over the last three months may be linked to discounting on big ticket items in an attempt to reduce stock levels.
For many retailers, the run-up to the all-important Christmas season when stock can be converted to cash can’t come soon enough.
This chart shows how retail sales growth has been levelling off recently (the blue line, which gives a better picture than the more volatile monthly stats):
Ian Gilmartin, Head of Retail & Wholesale at Barclays Corporate Banking, says UK retailers are in a gruelling scrap:
“It’s still tough out there for the UK’s retailers, so solid 3% growth compared with last September is welcome news, despite being slightly below expectations. Every sale continues to be hard-won and retailers are having to find creative ways to lure customers through their doors and onto their websites, but it seems from today’s data that they are persuading the public to keep spending. Although the dip in food sales from August is eye-catching, it was expected given the exceptional performance achieved over the summer and shouldn’t cause undue concern.
Any growth is significant given the plethora of challenges facing retailers – they are being hit from all sides, with business rates, the continued weakness of sterling and persisting uncertainty around Brexit combining to thwart investment and push up costs. Retail CEOs will be hoping to see some white smoke from Westminster and Brussels as soon as possible, and for solid assurances that they will be able to maintain their existing supply chains and frictionless trading arrangements with EU partners and consumers.
Here’s Channel 4’s Helia Ebrahimi on the retail sales figures:
High Street retail sales show a “stark slowdown” dropping 0.8% fr August – as summer parties give way to a hangover Autumn
Food down 1.5%,steepest fall in 3yrs
Strong growth in jewellery: some people annoyingly efficient at Xmas shopping or perhaps stockpiling for brexit?
Today’s report also shows the impact of inflation, particularly at petrol stations where fuel is a lot pricier than a year ago:
The sharp drop in retail sales last month shows that consumers are being squeezed, argues Emma-Lou Montgomery, associate director for Personal Investing at Fidelity International.
“Today’s UK retail sales numbers confirm what we all fear about the state of the high street, with the latest figures showing a decline in sales of 0.8% in September compared to August 2018. The drop in sales in September is a reflection not only of clouds starting to form in the sky, but also our pockets.
Food stores were the largest fallers contributing to this decline, with sales falling by 0.6%.
“While some retailers may be pinning their hopes on the recent news that consumers are likely to see a boost to their pay packets after this week’s data revealed that our earnings growth is currently outstripping inflation, UK consumers are unlikely to be splashing out just yet given the current climate of uncertainty around the Brexit negotiations.
Unlike most common colds we are suffering at this time of year; UK households are still unable to shake off the prolonged symptoms of inflation and poor wage growth since the Brexit vote.
Ben Brettell, senior economist at Hargreaves Lansdown, says today’s UK retail sales figures are a concern:
Retail sales fell 0.8% in September as shoppers cut back on spending after a bumper summer. Food sales suffered their biggest monthly drop in three years.
The monthly data is notoriously volatile, but the year-on-year figure of 3.0% undershot economists’ forecasts of a 3.6% rise, and September’s drop dragged the three-month number down to 1.2%, the third fall in a row.
Philipp Gutzwiller, head of consumer at Lloyds Bank Commercial Banking, says shoppers cut back last month, after a summer splurge.
“After a summer of spending boosted by the long, hot weather, September saw shoppers tighten their belts to catch up.
“As a result, retailers have had to redouble their efforts, focusing on either steep discounts or creating the theatre that makes going shopping an experience consumers can actually enjoy.
#UK retail sales disappoint in September, falling 0.8% month of month, core also, and rising only 3% year on year, 3.2% core, well below expectations.
After strong readings during the bumper summer months in the UK Retail Sales it’s no surprise that the upside couldn’t be sustained. Monthly figure falls to -0.8% with Yearly at 3% vs 3.5% expected. $GBP off slightly, $GBPUSD 1.3108.
One month’s data can be volatile, of course. On a three-month basis, the quantity bought in retail sales increased by 1.2%
ONS Head of Retail Sales Rhian Murphy said:
“Retail continued to grow in the three months to September with jewellery shops and online stores seeing particularly strong sales. This was despite a stark slowdown in food sales in September, following a bumper summer.”
Newsflash: UK retail sales shrank by 0.8% in September, a bigger fall than expected.
The Office for National Statistics reports that customers bought less food after a strong August.
In September 2018, the quantity bought declined by 0.8% when compared with August 2018, due mainly to a large fall of 1.5% in food stores; the largest decline in food store sales since October 2015.
UK Retail Sales (MoM) (Sep)
-0.8% ! ugly
It was another rough trading session in China today.
Nearly every stock fell, as today’s 3% slump means the Shanghai index has lost almost 25% of its value this year alone.
Chinese shares extended the world’s deepest slump and the yuan touched its weakest level in almost two years, testing the government’s ability to maintain market calm as risks mount for Asia’s largest economy.
Fears of widespread margin calls fuelled a 3 percent tumble in the Shanghai Composite Index, which sank to a nearly four-year low as more than 13 stocks fell for each that rose
Shares in Europe have opened a little higher, despite the WTO’s trade war gloom.
The FTSE 100 has gained 19 points, or 0.3%, 7,073. France’s CAC and the German DAX are both up around 0.45%.
The Chinese yuan is also weakening this morning, hitting its lowest level since January 2017
Yesterday, the US Treasury resisted labelling China a ‘currency manipulator’, in a new report on the foreign exchange policies of major US trading partners.
Chinese yuan very near now to a 10-year low. pic.twitter.com/qcU0dv4ue9
Roberto Azevedo’s warning of the perils of a trade war will have resonated in China’s stock exchanges today.
Shares are sliding sharply AGAIN today, as traders fear that the dispute with America will escalate further.
And the Shanghai Composite closes 3% down and below 2,500 for the first time in four years. pic.twitter.com/ynDlogXj8w
How bad would a full-blown breakdown of trade relations be?
According to WTO chief Roberto Azevedo, “a complete breakdown in international trade cooperation” would drive tariffs higher, knocking up to 17% off global trade growth.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
“Without action to ease tensions and recommit to cooperation in trade, we could see serious harm done to the multilateral trading system.
The long term economic consequences of this could be severe.”
“These effects would cause significant disruptions for workers, firms, and communities as they adjust to this new reality.
“Potentially millions of workers would need to find new jobs; firms would be looking for new products and markets; and communities for new sources of growth.
Once again groceries are expected to continue to do well, whilst non-essential items continue to disappoint.
After a strong summer of spending from the UK consumer, and a surprise to the upside in August, there is a good chance the UK consumer is reining in their spending ahead of the Christmas period.