U.K. retail sales appear solid in September, consumer spending growth likely to be subdued in coming quarter

U.K. retail sales seem strong towards quarter end. While the surprisingly solid performance of the U.K.’s retail sector this summer was stimulated partially by hot weather and sporting events, today’s CBI Distributive Trades survey hinted another month of strong sales growth in September as well. In particular, while the headline gauge for reported sales fell this month, at +23 percent the balance was still the third highest of the year, widely consistent with the long-run average and the seasonal norms for September.

Growth was recorded in several sectors including stores for durable household goods, hardware and DIY items, and online sales as well. Overall, retailers anticipated sales growth in October to stay consistent with the average for the time of year.

However, while the retail sector appears set to give another positive contribution to GDP growth in the third quarter, with consumers’ incomes continuing to be squeezed by rising inflation, sentiment close to the bottom of the range of recent years, and increased uncertainty about Brexit negotiations, consumer spending growth is expected to be rather more subdued in the quarter ahead, stated Daiwa Capital Market Research.

At 18:00 GMT the FxWirePro's Hourly Strength Index of British Pound was highly bullish at 125.495, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -2.12207. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex