Housing market recovery lifts retail sales UK retail sales rose more strongly than forecast in February, showing a 5.4% improvement from the same period last year. The Office for National Statistics (ONS) reported February retail sales rising by 0.7% from the previous month. One of the main factors behind this overall rise in spending was the resurgent housing market which has precipitated an increase in the purchase of household goods and furniture. This was due to the lagging effect of the improvement in house sales last year, as householders furnish their new homes. Sales volumes, or changes in the amount of goods sold each month, as measured by the ONS, also grew in February, rising by 0.3% from the January figure and by 2.2% from the previous year. Non-food retail outlets saw the largest rise in sales by volume. This steady increase in retail spending by consumers reflects the increasing confidence in the UK economy, however, there is still concern that the economy is heavily reliant on consumer spending as its main driver. Reinforcing these concerns, the Chief Economist of the British Chambers of Commerce, Mr. David Kern, opined that: “Although these figures are good news and will strengthen confidence, we must remember that the UK’s economic growth remains unbalanced and is too reliant on consumer spending.” Another concern is that UK exports, particularly to the Eurozone – which currently accounts for over 50% of our total exports – are declining, primarily due to the strength of Sterling against the Euro currency. Mr Kern also added the caveat that: “UK exports are still facing huge challenges, particularly in the Eurozone, which is one of our largest trading partners.” Many economic observers put this increase in consumer spending down to the dramatic fall in inflation in the UK, the average wage increases and the overall feel-good factor that these events have invoked.
Markets (March) (Data supplied by the Outsourced Marketing Department)
Following last month’s all-time high, the FTSE100 flirted with further improvement in late March, exceeding the 7,000 mark for the first time ever on March 24th, when it closed at 7,037.7. However, it lost momentum as the month closed, finishing at 6,773.00 to record a 2.5% fall on the month. The FTSE250 followed suit, ending the month at 17,090.64 for a loss of 1.06%, while the junior AIM market finished on 716.2 to show a marginal monthly gain of 0.24%. The Eurozone saw positive investor sentiment, as the Eurostoxx50 continued its positive three-month trend, gaining 17.5% since the turn of the year to end March at 3,697.38. Conflicting economic signals from the US Fed in America – where the threat of higher interest rates in the near future tempered the overall bullish sentiment – saw the Dow Jones lose 1.97% in March to close at 17,776.12, whilst the technology driven Nasdaq lost 1.26% to 4,900.88. The continuing bull-run in Japan saw the Nikkei225 index rise to 19,206.99, a gain of 2.18% for the month and to record a rise of 10% over the first quarter of 2015. On the foreign exchange markets, the Euro currency continued to fall against the mighty greenback, flirting with parity at $1.07, a 4.63% loss. Sterling also slipped against the US Dollar to $1.48, to record a monthly loss of 3.9%. Continuing global unrest and increasing US shale gas production saw the oil price, as measured by the Brent Crude benchmark, falling in to $55.32 a barrel, to record a fall of 10.95% since February. Gold bullion attracted few admirers in March, closing the month at $1,187.00 a troy ounce for a fall of 2.22% Download full report here