RTTNews - U.K. retail sales growth accelerated more than expected in April, with the performance being mixed across sectors.

Retail sales grew 0.9% in April from the previous month, the Office for National Statistics announced Thursday. This was larger than the expected increase of 0.5% and the 1.1% rise in March.

Sales volume recorded 2.6% growth annually in April, while economists were looking for a 2.4% rise. In March, sales were up 0.9%.

Food store sales rose 1.5%, the largest increase since May 2008. At the same time, non-food store sales were up 2.8%. Within non-food stores, the largest growth was reported in textile, clothing and footwear category, with a 11.9% increase.

Meanwhile, retail sales value was 3% higher than in April 2008 and was 1.7% higher for the three months to April than in the same period a year earlier.

The statistical office calculated the retail sales data based on a new methodology, which resulted in substantial revisions to previous numbers.

In a separate communiqué, the ONS said public sector net borrowing reached a record high in April. The public sector borrowed GBP 8.5 billion in April, up GBP 6.6 billion from the previous year. Public sector net cash requirement in April was GBP 5.2 billion compared to a net repayment of GBP 2.9 billion during the same period of last year.

At the same time, public sector current budget was in deficit by GBP 7 billion, 6.3 billion pounds more than the deficit in the year-ago period.

David Kern, Chief Economist at the British Chambers of Commerce said though public finances are worsening, it would be wrong for the government to engage in any fiscal tightening while the recession continues.

Today, the Standard & Poor's revised its outlook on the U.K. to negative from stable, assuming that general government debt burden would reach 100% of GDP even after assuming additional fiscal tightening. The rating agency affirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings.

Credit analyst at S&P, David Beers said The rating could be lowered if we conclude that, following the election, the next government's fiscal consolidation plans are unlikely to put the U.K. debt burden on a secure downward trajectory over the medium term.

Separately, the statistical office said business investment fell 5.5% sequentially to GBP 33.04 billion in the first quarter. On an annual basis, investment was down 6.8% compared to the 5.9% drop expected by economists.

According to BCC's Kern, accentuating the downturn in the immediate future, the plunge in investment poses longer-term threat. When the recovery arrives, the British businesses will lack adequate capacity to meet the demand.

A Bank of England report showed that M4 money supply growth eased to 17.4% annually in April from a 18.2% increase in March. On a monthly basis, the M4 money supply rose 0.1% in April.

Commenting on the U.K. data, Commerzbank Analyst, Peter Dixon said balance of risks to the first GDP growth estimate have shifted to the downside. Contrary to expectations, quantitative easing would boost money supply growth, there appear to be indications that the M4 lending component has gone into reverse.

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