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UK retail sales on cloud nine – Nomura

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 23, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Philip Rush, Research Analyst at Nomura, notes that the UK retail sales posted volume growth of 1.7% m-o-m and came better than the expectations but the large downward revision left room for a rapid recovery, with negative payback now likely.

    Key Quotes

    “Much of that 1.3pp upside surprise was caused by payback from the 0.8pp downwardly revised August forecast, but there was real upside too. We had expected weak clothing sales to balance out strength in other sectors, but the size of the upside surprises in food and household goods meant the realised weakness was woefully inadequate.”

    “Nor was this a discount driven surprise, with the retail deflator merely down 0.3% m-o-m, in line with the recent average. One “real” factor that might have supported was the ongoing rugby world cup, which is too infrequent for economists to formally factor in.”

    “During the 2011 tournament, there were upside surprises in both September and October (0.5pp and 0.9pp) followed by only small negative ones (0.3pp and 0.1), so it is not an undisputable source of strength. That is especially so as the 2007 tournament coincided with mixed surprises (0.5pp and -0.2pp), despite matches occurring near local time and England progressing to the final.”

    “Whether England’s early exit in 2015 will weigh on sales in October thus remains an open question, especially as it is the host. As the BRC survey appeared to capture the rise while others did not, it is likely to attract more attention now, even though its relationship with the ONS data is not strong.”
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