SUBSCRIPTION TO ANALYSIS
U.K. Retail Sales, Homebuyer Enquiries Suffer in Winter Freeze
U.K. retail sales climbed in January at the slowest annual pace in at least 15 years, and enquiries to buy homes dropped as winter weather hurt consumer spending, surveys showed.
Total sales at stores rose 1.2 percent from a year earlier, the British Retail Consortium said today. The number of real- estate agents saying enquiries from new buyers fell exceeded those seeing gains by 20 percentage points, down from a balance of 18 percentage points seeing increases in December, the Royal Institution of Chartered Surveyors said in a separate report.
Bank of England Governor Mervyn King said last month that data may be volatile as the economy ended its worst recession on record, a sales tax reduction ended and the longest cold snap in 30 years kept customers out of stores. The economy barely grew in the fourth quarter, ahead of an election that Prime Minister Gordon Brown must call by June.
The retail report shows “an awful start to the year and in stark contrast to an upbeat December,” Stephen Robertson, the BRC’s Director General, said in an emailed statement. “Customers are becoming cautious again in the face of economic and political uncertainty. Retailers will be hoping these results are mainly a snow-induced blip.”
Sales at stores open at least a year fell 0.7 percent, the BRC said. Demand for furniture and home-improvement products was worst hit as customers put off buying non-essentials during the month, BRC said. Temperatures touched as low as minus 22.3 Celsius (72.1 degrees Fahrenheit) in Scotland.
New Instructions
The number of real-estate agents saying new instructions to sell property fell exceeded those reporting an increase by 5 percentage points, RICS said. The reading showed a positive balance of 15 percentage points in December. The number reporting agreed sales showed a net balance of minus 15 percent.
“The cold snap in January clearly has a huge impact upon both supply and demand in the housing market with activity coming to a halt amidst the seasonal chaos,” RICS spokesman Ian Perry said in a statement. “House prices are likely to rise in the short term, but if more supply continues to come onto the market, it is possible that the market will run out of steam.”
The balance of agents reporting an increase in house prices exceeded those showing declines by 32 percentage points, up from 30 points in December, RICS said. Economists predicted a reading of 27 points, according to the median of 16 forecasts in a Bloomberg News survey.
The Bank of England paused its 200 billion-pound ($312 billion) bond-purchase program last week, pledging to resume the plan if needed to fight a further slump.
Bloomberg
