Non-stores sales in the U.K. jumped more than 18%, while Canadian retailers posted a 0.8% gain in sales.

(Bloomberg)—U.K. retail sales increased for a third consecutive month in March, with online shopping and groceries accounting for much of the improvement.

The volume of goods sold jumped 1.1% from February, defying economists’ expectations of a decline. Almost three quarters of the increase was due to “non-store” sales and food, the Office for National Statistics said Thursday.

The strength of online sales contrasts with the gloom in bricks-and-mortar retailing, with department-store owner Debenhams Plc becoming the latest victim this month when lenders took over in a debt restructuring deal that wiped out shareholders. Philip Green’s Arcadia Group Ltd. retail empire has named restructuring experts to its board, while the likes of BHS and electronics chain Maplin have disappeared entirely.

Sales at department stores and spending on household goods fell in the latest three months compared with a year earlier, while non-stores sales jumped more than 18%. Online operators now account for 18.6% of the value of all retail sales.

The resilience of consumers in the face of Brexit uncertainty is largely being supported by the labor market, where pay growth is picking up, employment is at a record and the jobless rate is the lowest its been since the 1970s.

advertisement

But there are signs that some households are under pressure as they emerge from a protracted inflationary squeeze on living standards. The Bank of England reported on Thursday that defaults on credit cards rose significantly at the start of the year.

Retailers made a positive contribution to the economy in the first quarter, with sales rising a respectable 1.6% from the final three months of 2018. That added 0.09 percentage point to growth, according to the ONS.

Meanwhile, businesses are cutting spending, fearing an economic slowdown could turn into a slump if the U.K. ends up leaving the European Union without a deal to cushion the blow.

Retail sales last saw three straight gains in the summer of 2017. But the annual pace of growth was inflated by poor figures in March 2018, when Britain was hit by snow and freezing temperatures. Sales leaped 6.7% from a year earlier in March, the fastest pace since October 2016, and were up an annual 5% in the first quarter.

Departments stores were the only retail segment that sold less last month than they did a year earlier.

advertisement

Retail sales excluding auto fuel rose by 1.2% last month, with warmer weather encouraging spending and food sales also recovering after a weak February. Clothing and household goods posted strong gains, only partly offset by weaker sales at department stores.

Canadian retail sales bounce back

Canadian retailers emerged from months of slumping sales with a sharp rebound in February that may ease some worries about consumer weakness.

Retailers posted a 0.8% gain in sales on the month, Statistics Canada said Thursday from Ottawa, versus economist expectations for a 0.4% gain. February’s increase was the strongest since May 2018 and follows six straight months of negative or flat readings—including a 0.4% decline in January—that fueled concern about slowing household consumption.

A pick-up in receipts was expected on the back of rising prices for gasoline, but the numbers suggest Canadians were in a spending mood beyond the extra cost of filling up their tanks. New car dealers saw a 3.1%increase in sales, while strong gains were also recorded at general merchandise stores and supermarkets. The retail figures will restore confidence the nation’s economy is poised for a better start to this year, after the economic expansion nearly came to a halt at the end 2018. While first quarter gross domestic product numbers won’t be released until the end of next month, there were a series of negative readings in February for exports and manufacturing that raised questions around growth for that month. February GDP data is due April 30.

In volume terms, retail sales were up 0.2% in February. Sales were up in only five of 11 subsectors, but those sectors were the largest ones and represent 73% of total sales. Excluding autos, sales were up 0.6%—topping expectations for a 0.2% gain. That follows a 0.6% decline for this gauge in January.

advertisement

The figures in the sections below are based on unadjusted (that is, not seasonally adjusted) estimates.

On an unadjusted basis, retail e-commerce sales were $1.4 billion in February, accounting for 3.3% of total retail trade. On a year-over-year basis, retail ecommerce increased 23.8%, while total unadjusted retail sales were up 2.1%.

Favorite