I am aware of the danger of sounding stereo-typical here but it is the sounds of shopper’s heels pounding the pavements and shopping malls that signal a vibrant economy. Of course in the modern day this includes shoppers tapping at keyboards and delivery men knocking at doors, but combined together, retail sales tell us so much about the economy.
Retail sales in Britain grew at the fastest pace in March this year and overcame the small decline in February as retail sales are now up 3.6% on the year. This is a much better than expected gain and analysts point this change in retail sales to the change in consumer’s attitude. In the past, consumers have tightened their belt in fear of the crisis and had their pockets being emptied by rising inflation and falling income. However, as inflation has fallen, we have seen an increasing number of consumers loosening their belts and opening their pockets to reflect the change in consumer confidence. Consumers appear united in their view that interest rates will remain low and inflation will continue to fall, with the economy returning to growth by the end of the view – the perfect recipe to justify a little bit of shopping!
Of course, there are other valid reasons why retail sales might be up. The weather for the beginning part of the year has been particularly favourable, with April showing signs of an early warm summer. Added to this are the continuing sales and bargains from the festive Period and retailers who are keen to make the most of the footfall. It is unlikely that 1 week of increased sales could change the profit line for retailers but employment opportunities in the retail sector are increasing, which is a positive benefit of increasing sales.
Talking about unemployment, Australian unemployment figures are out overnight. The Australian economy has struggled of late with the demand for resources in the East falling. The Australian economy is heavily dependent on mineral and commodities trade with China and India, which has been notably slow. However, positive news across the world markets may spark a resurgence in trade activity, which could be reflected in Australian unemployment figures.
Now would be a good time to get that summer shopping done… (JKM)