Sale, Sale, Sell?

UK retail sales, excluding auto fuel, advanced by 1.8 percent in April and were ahead by 7.7% from a year earlier, according to the Office for National Statistics and were bolstered by food sales, which jumped by 3.6%, apparently the largest rise since April 2011 which the ONS said were boosted by an extra public holiday for a Royal wedding, but who knows, perhaps the Nation just feels more hungry in Aprils’. Either way, food sales more than made up for the decline in non-food sales, lower by 0.4%, and auto-fuel, which fell by 3.7%.

We prefer to study charts, as price doesn’t lie or try to guestimate, so first up is one that compares the month-on-month bar chart of retail sales against the blue annualised rate.

21 May 1

Indeed on an annualised basis there has been a strong bounce since last month’s dip, but on a month-by-month basis momentum, not shown, is slowing.

The top economists’, surveyed by Bloomberg, were way out on the consensus forecast, at 0.5% and 5.5% respectively, as they tend to be for the majority of economic predictions that they are surveyed on, although one of them did make a valid point that the increase was a sign of elevated confidence.

We would agree on this, which is why we study a Nation’s main stock-indices, perhaps the best barometer of whether there is growing optimism, confirmed by a rising index, a sideways move perhaps indicating a subtle change, or a negative social mood as evidenced by a falling stock-index.

Perhaps it’s time to introduce the FTSE All Share Stock Index?

21 May 2

Well, one can certainly observe a close correlation between retail sales and the stock-market and a closer look shows that the index peaked in late February of this year, since when both momentum and volume have trended lower, never a healthy sign.

So perhaps the retail sales number are giving a different message, Sale,Sale, Sell.

If you would like to know more about our Investmentmatters service, here is a good place to start.

 

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2 responses to this post.

  1. Posted by PG on 21/05/2014 at 22:25

    ‘peaked in february’? It’s peaked higher since (14 May) which casts doubt on the whole negative (as usual) assertion made in the article. It’s almost certainly going to peak higher again too – 3 attempts at testing the 6900 mark, the next one might make it – unless Putin annexes parts of Ukraine

    Reply

  2. […] late May of this year we looked at UK retail sales, as the state’s “Office for National Statistics,” […]

    Reply

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