Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

UK Retail Sales High Street Boom- The Truth Behind the Headlines

Economics / UK Economy Jun 19, 2008 - 06:27 PM GMT

By: Nadeem_Walayat

Economics Best Financial Markets Analysis ArticleIn the midst of the worst economic conditions in nearly 20 years, May saw retail sales soar by a surprising annualised rate of 8.1%, the highest rate in 20 years, up 3.4% for the month. The surge is more akin to that expected during boom times rather than the bust that the UK is fast heading towards. The mainstream media immediately seized on the headline rate to announce Britain is experiencing a mini high street spending boom. However looking behind the headline figures tells a different story.



  Retail sales Index Month on Month change
2008 01
139.4
+2.1
2008 02
140.7
+1.3
2008 03
140.3
-0.4
2008 04
139.9
-0.4
2008 05
144.7
+4.8

 

What is apparent from the retail sales figures is that the preceding 2 months experienced a contraction in sales volume, the actual average rate for the last 3 months is just 1.3, which equates to % change of just 0.9% on the month, therefore the monthly change can be put down to the under reporting of the true rate of retail sales for the months of March and April 2008, and thus resulting in the sharp jump for May 2008.

But that still does not explain the annualised rate of 8.1%, for that we need to take a look at the retail sales figures for 2007.

  Retail sales Index Month on Month change
2007 01
130.9
-2.5
2007 02
133.2
2.3
2007 03
134.4
1.2
2007 04
134.7
0.3
2007 05
133.8
-0.9
2007 06
135.1
1.3

 

Retail sales growth for April and May 2007 was extraordinarily low, and infact fell in May 2007, therefore when the current index is compared against May 2007 the resulting increase is a sharp and unrealistic 8.1%. To obtain an more accurate figure that irons out monthly inaccuracies the best strategy is to compare against an average of the 3 month retail sales figures i.e. March, April, May 2008, against March, April, May 2007. This results in a current retail sales index of 141.3 compared to 134.3 for the same period in 2007, resulting in an annualised rate of 5.5%. The next step is to subtract Retail Prices Index for the impact of inflation of 4.3% from the 5.5% rate which results in a real terms increase of retail sales of just 1.2% on an annualised basis.

Real retail sales on an inflation adjusted basis have been depressed for approaching 3 years which is reflected in the poor performance of retail stocks that have under performed the stock market as a whole. Far from the highest growth in retail sales since records began, the actual real retail sales index shows retailers just about managing to keep their heads above water.

Therefore a valuable lesson is not to take and run with the monthly headline figures as much of the mainstream media right from the BBC downwards mistakenly appears to have done so with May's retail sales figures.

The current real rate of 1.2% is still expansionary and implies that a UK recession is not imminent and thus in line with the Market Oracle forecast for UK GDP growth of 1.3% for 2008.The key to watch for in the coming months will be if real retail sales go negative on an annualised basis from the current rate of 1.2%, which will be a sign of major distress amongst high street retailers and reflected in share price performance regardless of the totally unrepresentative headline rate.

By Nadeem Walayat

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Attention Editors and Publishers! - You have permission to republish THIS article if published in its entirety, including attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules