U.K. retail sales unexpectedly rose in October as shops offered discounts to lure consumers whose confidence has been undermined by inflation and rising unemployment.
Sales including fuel rose 0.6 percent from September, the most since June, the Office for National Statistics said today in London. The median forecast of 25 economists in a Bloomberg survey was for a 0.2 percent decline. On the year, sales were up 0.9 percent.
U.K. consumer sentiment fell to a record low last month as unemployment increased and inflation outpaced wage growth, while Bank of England Governor Mervyn King said yesterday the economy faces a “markedly weaker” outlook. The central bank, which is buying government bonds to aid the recovery as Europe’s debt crisis escalates, held its key interest rate at a record low this month.
“At the moment, the only good news for consumers is that interest rates aren’t likely to go up for a very long time,” Howard Archer, an economist at IHS Global Insight in London, said before the data were published. “The squeeze from inflation will ease next year, but it’s still going to be a hugely challenging environment for consumers.”
The pound rose as much as 0.2 percent after the report. It traded at $1.5776 as of 9:32 a.m. in London, up 0.3 percent from yesterday.
Spain Cuts GDP Forecast, Says too Early to Know Regions’ Deficit
Spanish Finance Minister Elena Salgado said the economy will grow about 0.8 percent this year, less than the government’s target, and it’s too early to know if the regions will meet their deficit goal this year.
The new forecast is below the 1.3 percent government target that Salgado had said since August would be hard to meet, and is in line with the estimate of 0.7 percent published by the European Commission last week.
Salgado said that while the central government will meet its budget-deficit target, it’s not clear whether the regional governments will do so, casting doubt on the overall budget- deficit goal of 6 percent of gross domestic product.
“I maintain 6 percent as the priority,” Salgado said in an interview with Cope, when asked if the goal would be met. “We don’t have the regions’ third-quarter budget data yet.”
Spain’s economy stagnated in the third quarter, data showed yesterday, as the unemployment rate approached 23 percent. The yield on Spain’s 10-year bond surged to 6.4 percent, the highest since August before the European Central Bank started propping up the nation’s bond market with debt purchases.
Consumers Save Less to Fuel U.S. Holiday Sales as Stocks May Lag: Retail
Retail stocks may underperform the market because consumers are financing spending partly by saving less, which might be unsustainable as unemployment remains stalled around 9 percent.
Retail sales rose 0.5 percent in October from the prior month, according to data from the Census Bureau, beating the estimate for a 0.3 percent increase in a Bloomberg News survey. Meanwhile, Americans saved 3.6 percent of their disposable personal income in September, the lowest in almost four years, based on Bureau of Economic Analysis data.
