Latest figures revealed by the Office for National Statistics show a 13.9 per cent rise in retail sales in June, compared with May as pent-up demand among consumers increased overall spending. A check on business activity from IHS Markit and the Chartered Institute of Procurement and Supply also shows Britain's private sector economy returned to growth in July as clients and customers returned to spending and businesses were able to open their operations as staff returned.
Despite the slightly uplifting numbers, economists say consumer spending remained weak in several areas, and warned growth could dwindle later in the year. Latest data for the second quarter show that the GDP fell by 20.3 per cent in April and rose by only 1.8 per cent in May. June's growth number is not expected to be strong enough to keep the quarter out of negative territory.
A third of businesses surveyed by IHS Markit reported job cuts in July. Chief business economist at IHS, Chris Williamson said, “While the recession looks to have been brief, the scars are likely to be deep. Even with the July rebound there’s a long way to go before the output lost to the pandemic is regained.”
Senior UK economist at the consultancy Capital Economics, Ruth Gregory cautioned that retail sales were unrepresentative of the wider economy. “Since the [retail] sector has benefited disproportionately from online spending and a switch from other types of spending, this overstates the extent of the recovery in the wider economy,” she said.
