Retail sales in UK rebound past expectations(69882)

U.K. retail sales jump by the most since May 2008

U.K. retail sales rebounded more than economists forecast in February with the biggest jump since May 2008 as Britons raised spending on goods from electrical items to auto fuel.

British consumers have emerged from the worst recession on record in relatively good shape, Simon Wolfson, chief executive officer of clothing retailer Next Plc, said in a statement today. Chancellor of the Exchequer Alistair Darling said yesterday that while unemployment hasn t risen as much as was feared, he ll postpone public spending cuts for now.

It snowed in January, no-one went shopping, and when the snow thawed people went shopping again, said Alan Clarke, an economist at BNP Paribas in London. Still, it s going to be pretty hard for retail sales to add to growth in the first quarter, they ll be a drag. The consumer will be decelerating as disposable income slows.

The pound rose as much as 0.4 percent after the release and traded at $1.4968, up 0.5 percent on the day, as of 10:24 a.m. in London. The yield on the two-year benchmark government bond was up 1 basis point today at 1.193 percent.

Household Goods

The increase in sales for February was led by an 11.2 percent jump at household goods stores, the statistics office said. Auto fuel sales rose by 9.1 percent and textile, clothing and footwear shops had a 1.1 percent gain. Food stores showed a 1.2 percent drop, the most since June 2008.

The January sales drop was revised down from a decline of 1.8 percent previously reported because of late returns of data from retailers, the statistics office said.

Next, the U.K. s second-biggest clothing retailer, said today full-year earnings rose 20 percent as it expanded Internet and catalog sales and sold more goods at full price in stores.

Darling, presenting his budget report to Parliament yesterday, said that to start cuts in public spending before the recovery was assured would be both wrong and dangerous. The ruling Labour Party s resistance to faster spending cuts have helped it narrow the lead of the opposition Conservatives ahead of an election due by June.

Jobless claims fell last month at the fastest pace since 1997, though the number of people in work in the three months through January dropped to a four-year low of 28.9 million.

The retail sales deflator, a measure of price changes in shops, showed a 1.6 percent annual increase, the statistics office said. Excluding auto fuel, it showed a 0.1 percent drop.

Retail sales in UK rebound past expectations

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