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Saturday 22nd August 2020
Hi Friend,
Retail Sales Rise ...
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| The Recovery Gathers Pace ...
Retail Sales were up in July, compared to prior year. It was the first increase, year on year, since the January start to the year. Mike Ashley's Fraser Group suggested there was some "semblance of normality" returning to the high street.
Household goods stores were up by almost 10%. White goods and DIY were beneficiaries. Furniture and floor coverings prospered from the housing market recovery. Garden centres once again featured, with sales up by 12%.
Things must be getting better or people are returning to work. Alcohol sales have fallen for the first time since the start of the year. Clothing and footwear sales were down by 25%. Cosmetic sales were down by over 11%. Overall retail values increased by 3.7% (excluding auto fuels) and volumes increased by just over 3%.
The online story continues. Year on year growth was 53%, accounting for 29% of all retail transactions. Food penetration has doubled over the past twelve months to 11%. Non food sales increased by 60% accounting for 30% of all volume.
Clothing sales online increased by 22%. In store sales were down by 45% year on year. The online mantra is UX and UJ, the quality of user experience and journey. "One Click" the standard. No wonder sales are down in clothing and cosmetics. There is little or no chance to "experience" the product.
The
in store retail experience begins with a lengthy queue, confronted by a
gatekeeper, with a face shield, pointing a gun at your head, mumbling through a face mask, with no semblance of a smiley welcome. Next will come the sniffer dog, detecting those with a temperature and a hint of a cough, trained to bark aggressively, at those failing to wear a mask.
The rise in retail sales suggests the recovery is gathering pace. The latest IHS Markit/CIPS data points to a further increase in output in August. The composite index increased to over 60 in the month. This was the highest rate of business expansion for almost seven years. Manufacturing and services were beneficiaries as businesses opened up. Manufacturing production increased at a slightly faster pace than services as both sectors experienced a recovery in demand.
Yes the recovery is gathering pace, the recovery will be V shaped but then it always is ...
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| Borrowing Soars ...
Government borrowing in July was £26.7 billion, up by £28.3 billion compared to last year. In the first four months of the financial year the government was forced to borrow £150 billion up by £128 billion on the same period in 2019.
The OBR expects total borrowing in the current financial year to hit £322 billion around 16% of GDP. Total debt increased to £2 trillion, over 100% of GDP.
Rishi Sunak, the Chancellor or the Exchequer explained "The crisis has put the public finances under significant strain. We have taken action to support millions of jobs, businesses and livelihoods. Without that support things would have been far worse."
He also warned, "today's figures are a stark reminder, that we must return our public finances to a sustainable footing over time. This will require taking difficult decisions!" No extension of the furlough scheme towards the end of the year, The "Eat Out to help Out" scheme at a cost of £180 million to date, will not be on the menu from the end of the month. The government is keen for the return to work to continue. "protecting, supporting and creating jobs, to ensure nobody is left without hope". Oh dear, that doesn't sound good!
In the markets, Sterling closed at $1.31 against the dollar. The move above $1.32 a little too ambitious in the week. The FTSE closed down, finding support at the 6,000 level. In the US, NASDAQ pushed to a new high, assisted by Apple's all time high. Gold bears were singed a little as the test of $2,000 proved a little too much. The Bitcoin boys were baffled, as the move above $12,000 was short lived,
That's all for this week! Have a great, safe, week-end ...
John
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