Resilient consumers make the likelihood of a negative GDP reading in Q3 look more remote - EY ITEM Club comments
15 September 2016
- Retail sales dip in August…
- …but fall is modest and still points to a robust performance for the quarter
- Likelihood of economy failing to grow in Q3 looking more remote
Martin Beck, senior economic advisor to the EY ITEM Club, comments:
“The consumer sector has so far proved to be quite resilient to any initial impact from the EU referendum result. Although sales volumes were down by 0.2% in August some fall was to be expected given the strength of volumes in the previous month. The strength of retail’s performance over July and August means that even if volumes were to stagnate in September, sales growth in Q3 would still come in at 1.5%, almost level-pegging with the 1.6% rise seen in the second quarter.
“Among the retail sub-sectors, food volumes were up by 0.7%, the second consecutive monthly rise, while department store sales also increased. But drops occurred in other areas, including clothing and household goods.
“With inflation set to rise quickly over the next few months, the retail environment looks likely to become less favourable. However, while we still have no hard post-vote data on business investment, the area most vulnerable to Brexit-related uncertainty, today’s numbers offer further cause to think that a negative reading for GDP growth in Q3 is a remote prospect.”