U.K. retail sales in April bounced higher than expected, showing signs that the recession is easing.
The volume of retail sales in April was 2.6% higher than in the same period last year, the Office for National Statistics (ONS) said Thursday.
According to ONS statistics, the retail sales volumes rose 0.9% last month, nearly double analysts' forecasts of a 0.5% gain. In March, sales rose 1.1%.
Predominantly, food stores rose by 1.5 per cent, the largest increase since May 2008 when it was 2.8 per cent. And non-food stores increased by 2.8 per cent. Within the non-food stores, the largest increase was for textile, clothing and footwear stores at 11.9 per cent.
Non-specialized stores increased by 6.0 per cent, the largest increase since February 2008 when it was 7.1 per cent and household goods stores decreased by 8.0 per cent. Non-store retailing and repair increased by 9.1 per cent.
Total sales volume in the three months to April was 0.7 per cent higher than the same period a year ago, this is the smallest increase since January 1996 when it increased by 0.6 per cent. Sales volume increased by 0.8 per cent for predominantly non-food stores, this was the smallest increase, since December 1998, when it increased by 0.3 per cent.
The seasonally adjusted value of retail sales for the three months to April was 1.7 per cent higher than in the same period a year earlier and April 2009 was 3.0 per cent higher than in April 2008.
The ONS retail data showed most sectors, especially department stores, performing well. Non-specialized store sales rose 3.5 percent on the month, the highest since July 2006.
We remain doubtful that this is the start of a sharp or sustained consumer recovery, said Vicky Redwood, an economist at Capital Economics.
Retailers have been cutting jobs to survive the downturn but there have been some signs that Britain's recession could be easing after the economy shrank 1.9 percent in the first three months of the year -- the sharpest drop since 1979.
Most economists think Britain will remain in the recession until next year and they expect no revision to the second estimate of first quarter GDP, which is due on Friday.
The government has poured billions into propping up banks in the hope that credit will flow again, but a lending survey by the Bank of England on Thursday made gloomy reading.
The Bank said major UK lenders actually cut lending to companies and homebuyers in April compared with March.
Figures from the ONS showed business investment in Britain fell 5.5 percent on the quarter in the first three months of 2009. On the year, investment fell 6.8 percent.
Sustained sharp drops in business investment would have very serious negative repercussions for future UK productive capacity and productivity, said Howard Archer, an economist at Global Insight.