British Shoppers Defy Manufacturing Recession,

17 December 2001

Retail volumes across the nation’s shops rose in November at the fastest annual rate in thirteen years, reports the Office for National Statistics.

Clearly undeterred by the [as yet] marginal rise in unemployment and gloomy reports from the manufacturing sector, Britons shopped like there was no tomorrow propelling annual growth last month to 7.1% – its highest since May 1988.

Monthly sales growth hit its highest level since the beginning of 2000, a seasonally adjusted 1.3%, confirming says the ONS, “anecdotal evidence [that] people are going out buying clothing they didn't in October” – ostensibly because of unseasonably warm weather that month.

Robust November sales volumes were also helped by the first annual reduction in prices since January. Especially buoyant were the textiles, clothing, footwear and household goods sectors. Such clear evidence of continued consumer optimism [or abandon] could temper earlier predictions of a sharp slowdown in Q4, although some economists fear that consumer debt-profligacy could herald problems when interest rates rise from their present 37-year low.

Such concerns could rebound on the manufacturing sector’s hopes for a further cut in interest rates. The Bank of England’ monetary policy committee would be “reluctant to lower rates again if consumer demand remains firm,” opined analyst Philip Shaw of Investec. “A jolt of bad news would be necessary to reawaken the committee's urgency to bring rates down,” he added.

Meanwhile, in the real world, the Confederation of British Industry’s latest industrial trends report warned that domestic and export orders remain “significantly below normal”.

News source: Financial Times [14-Dec-01]