Improvement Seen After A Poor June

Retail sales have rebounded in July after a poor June sparked fears among investors that the spending power of UK consumers had lessened.

Sale volumes grew solidly, with grocers performing well, and experts now predict that June's contraction was an anomaly rather than an ongoing trend.

Among retail sub-sectors, footwear establishments and clothing shops reported especially good results to the CBI, but one of the stand-out performers was the motor industry.

Car sale numbers are considered a valuable indicator of the general health of the economy, as if consumers feel they have enough disposable income to be able to spend more than £10,000 on a product, they likely feel financially secure.

Barry Williams, chair of the CBI Distributive Trades Survey Panel and Asda senior vice president and chief merchandising officer for food, said: "As the temperature began to rise, it seems so did sales volumes. Almost all sectors saw growth, with grocers and clothing stores telling us they performed particularly well as people bought barbeque supplies and summer outfits.

"Retailers expect an even faster rise in sales volumes next month, and are stocking up in anticipation of growing demand."

Wholesalers also performed well, with 44 per cent reporting that their sales volumes grew, compared to 21 per cent that said they fell - giving an overall balance of +23 per cent.

However, although this would generally be regarded as solid growth, analysts had predicted a +33 per cent upsurge, which would have made up for the disappointing June that most retailers reported.

According to Reuters, the sterling fell on the news of the retail growth, as investors had expected higher than average earnings among big name brands like Tesco and Asda.

But although the pound hit a day's low of $1.7008 - down from $1.7037 - it remains strong when compared to other currencies, benefitting importers and harming exporters.

Expert Opinion

These figures will be viewed very positively by all businesses involved in the retail sector, particularly with the improvement coming after a difficult June in which sales struggled. <br/> <br/>“This will undoubtedly spell good news for SMEs, many of which will have seen the recent improvements in the economy in general as a sign they should push on with their growth and expansion plans. <br/> <br/>“It will be interesting to see how matters develop across the coming months, but it is vital that any small businesses looking to develop their offerings always ensure they consult legal experts to ensure their next steps are sound from a best practice and compliance point of view. The right support network is an essential tool for SMEs." Steven Beahan - Partner