So, we were all so impressed with the swashbuckling performance of Gareth Southgate’s team that we all rushed out and bought replica England shirts and packs of lager – to the point that retail sales in July were 0.5 per cent higher than in June. No, I don’t buy that either – even though it has been widely reported today in reaction to the latest statistical release from the Office for National Statistics (ONS).
As I have written here before, I don’t really trust the month-on-month figures for retail sales. They are too volatile to be meaningful. Moreover, they depend somewhat on how many weekends fell in the month: some have four weekends, some five, and some four and a half. Nor, on closer examination, does the football shirt argument stack up: clothing and footwear stores actually suffered a fall in July, while department stores enjoyed a rise. Moreover, if we wanted to buy replica England shirts, why didn’t we buy them in June, when the Euros tournament began (and when retail sales fell by 0.9 percent), rather than waiting until July?
The figures we should be keeping our eye on are the quarterly figures – which we should compare not with the previous quarter but with the same quarter in the previous year. These provide much more stable statistics and are comparing like with like. While the monthly figures are supposed to be seasonally adjusted, the whole business of seasonal adjustment is deeply unsatisfactory. It is inevitably based on historic patterns of spending which might not be relevant anymore – such as the boost in spending which used to come with the January sales but now comes with Black Friday in November or December instead.
So what do the quarterly figures tell us? That retail sales volumes were up 0.8 per cent in the second quarter of 2024 compared with 2023. This is significant because it seems that finally, the long slump in retail sales may be at an end. Retail sales had been on a long downward trend ever since the post-lockdown rebound in 2021. Retail was one corner of the economy which refused to recover. Even now, sales volumes are still a little down on what they were in 2019.
If retail really is now beginning to recover, it holds out some hope for our bombed-out high streets. Department stores, or those that remain, seem to be doing best of all. But it does again raise the question: why didn’t Rishi Sunak wait until autumn for an election and benefit from the better economic news which now seems to be coming in week by week? It might not have made a lot of difference to the outcome, but it would be better than sitting on the opposition benches and watching as a Labour government enjoys better economic weather and luxuriates in the false narrative that it has suddenly turned the country’s fortunes around.
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