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23 Jan 2015
UK retail sales outperform expectations - ING
FXStreet (Barcelona) - James Knightley, Senior Economist at ING, reviews the UK retail sales release, and expects that consumer spending will be a major drive of UK growth, anticipating a 0.8% 4Q GDP print next week.
Key Quotes
“The UK’s December retail sales numbers are surprisingly strong, rising 0.2%MoM when auto fuel is excluded, far better than the 0.7%MoM fall the market was anticipating. We had also been expecting a big drop given that we suspected the growing prevalence of “Black Friday” sales in November would cannibalise sales from December while courier issues could also have had an impact.”
“[..] consumer spending is going to be a major driver of growth in next week’s 4Q GDP number. The consensus is for growth of 0.6%QoQ, but we are predicting a rise of 0.8%.”
“With real incomes set to rise due to rising wage growth and falling inflation, tax cuts coming through and employment continuing to make strong gains, 2015 in general should see consumer spending perform well.”
“So, while inflation is currently very low and could in the very near term push below zero, we suspect that medium term inflation pressures will build through 2015, suggesting that rate hikes are not out of the question later this year.”
Key Quotes
“The UK’s December retail sales numbers are surprisingly strong, rising 0.2%MoM when auto fuel is excluded, far better than the 0.7%MoM fall the market was anticipating. We had also been expecting a big drop given that we suspected the growing prevalence of “Black Friday” sales in November would cannibalise sales from December while courier issues could also have had an impact.”
“[..] consumer spending is going to be a major driver of growth in next week’s 4Q GDP number. The consensus is for growth of 0.6%QoQ, but we are predicting a rise of 0.8%.”
“With real incomes set to rise due to rising wage growth and falling inflation, tax cuts coming through and employment continuing to make strong gains, 2015 in general should see consumer spending perform well.”
“So, while inflation is currently very low and could in the very near term push below zero, we suspect that medium term inflation pressures will build through 2015, suggesting that rate hikes are not out of the question later this year.”