Consumers are spending again. Up to late last year, the increase in retail sales was patchy and the figures were supported by rising car sales. Now there is no doubt that an increase in spending has spread, with every sector now showing an increase, albeit with the rate of increase varying widely from one to the other.
Particularly notable is the increase in sectors which were slow to join the initial rise in spending – spending on furniture and lighting is up 22 per cent, clothing and footwear is 14 per cent ahead and overall department store spending is 8.4 per cent up on the same month last year.
Consumers appeared to start spending by replacing banged-out cars, but now the trend is more generally upwards. Rising property sales are helping the furniture sector, but a more general uplift seems to be under way. Even bar sales are now rising, up close to 6 per cent in volume terms year on year.
The figures suggest that the retail sector should slowly be starting to feel the benefits of recovery. Of course, it still isn’t easy and one key factor is that prices are static or falling in many sectors. While the volume of sales is up 8.6 per cent in September compared to the same month last year, the total value of sales is up just4.9 per cent.
There are some special factors here, notably falling fuel prices due to international trends, but consumers are still looking for better value. Sales in departments stores – a good bellwether – are up 8.4 per cent in volume terms year on year but just over 5 per cent in volume terms.
The “sale” is now a semi-permanent feature in most stores, at least in some sections, as consumers are lured by the promise of a bargain. It is not a Celtic Tiger-type spending trend, but compared to the lacklustre spending trends in most other economies, the increase here is notable.
Helped by rising employment, low interest rates and, in some cases, rising earnings, consumers are finally loosening their purse strings. There is also an element of bounceback in the figures after the huge falls during the crisis.
The budget tax cuts and rising earnings in many sectors should keep the tills ringing heading into next year.
