Retail sales will help bring UK out of recession, claims Capital Economics

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A rise in retail sales during September will help bring the UK out of recession, claims Capital Economics economist Samuel Tombs.

UK economist Tombs says a 0.6 per cent month-on-month rise in UK retail sales were boosted by temportarty factors.

He says: “Retail sales volumes rose by a healthy 0.6 per cent on the previous month.

“This left volumes 1 per cent higher in the third quarter than in Q2, suggesting that the sector will add about 0.2pp[percentage points] to overall quarterly GDP growth.

“Nonetheless, some of this growth seems to have reflected temporary factors, not least a recovery from the Olympics-related drop in spending in August.”

Tombs says an increase in clothing sales was probably fuelled by autumnal weather, while the release of the latest iPhone provided a small boost to sales of computer and telecomms equipment.

UK GDP shrunk by 0.4 per cent during the second quarter of the year the Office for National Statistics reported in September, an upward revision from its previously forecast 0.5 per cent contraction.

The National Institute for Economic & Social Research claimed earlier this month that the UK had already exited recession but remained in a depression.