Signs of early Christmas shopping as inflation spike threatens household budgets
Retail sales rose for the first time in six months during October, according to official figures, suggesting shoppers started their hunt for Christmas gifts early as pressure intensifies on household budgets.
The Office for National Statistics (ONS) reported a 0.8% increase in volumes last month compared to September – with clothing among categories leading the way.
It said that fashion sales were just 0.5% below pre-pandemic levels, adding that “some retailers (were) suggesting that early Christmas trading had boosted sales.”
The figures showed that clothing was in high demand as winter approached
Non-food led the growth more generally, though fuel sales were down sharply to normal levels – a consequence of the end of the panic-buying saga that was prompted by a reaction to a shortage of tanker drivers to deliver supplies.
Online sales fell to lows not seen since the start of the pandemic, according to the ONS data, which will give some comfort to physical stores ahead of their busiest season of the year.
The figures are important as they are an important barometer of the economy, which is dominated by consumer spending in the UK.
It suggests some momentum after the last set of growth figures suggested a slowdown was in place as rising costs, linked to global supply chain woes and labour shortages, were having a negative effect across the economy.
Figures this week showed the rate of inflation hit its highest level for almost a decade in October – led by surging fuel and household energy costs.
The ONS figures were released as a closely-watched measure of consumer confidence edged up for the first time in four months, despite the leap in living costs.
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GfK’s index had stood at its weakest level since the early 2021 lockdowns ahead of the latest survey, carried out earlier this month at a time when fuel and energy bills were surging.
It showed people were more willing to purchase expensive items in the run-up to the key Christmas season, though the index still came in at -14.
That was up from -17 in October.
Joe Staton, GfK’s client strategy director, said views on the economy had improved despite rising inflation and the prospect of higher interest rates, although consumers were less buoyant about their personal finances.
“This weakness is important as it reflects day-to-day plans to save or spend and is a strong driver of overall UK economic growth,” Mr Staton said.
“However, one highlight for both physical and virtual retail is the seven-point jump in major purchase intentions in the run-up to Black Friday and Christmas.”
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Inflation jumps to 4.2%
The Bank of England earlier this month put the country on notice that an interest rate rise, to cool inflation expectations rather than prices outside its control such as oil, was on the way.
Financial markets are split on whether it will happen next month or in February, as the Bank is anxiously awaiting more data on the pace of the country’s economic recovery.
While employment figures covering last month were mostly positive following the conclusion of the furlough scheme, policymakers will be anxious not to choke off growth through a rise in borrowing costs.
Business
‘Knock-back for London’ as AstraZeneca sells shares directly on rival New York Stock Exchange
One of the UK’s most valuable listed companies is to sell its shares directly on the rival New York Stock Exchange, in a move described as a “knock back for London”.
While AstraZeneca will maintain its headquarters in the UK and its primary stock listing on the London Stock Exchange, the news can be seen as a move away from London.
“Although there has been no suggestion that AstraZeneca is imminently going to up sticks and move its primary listing from London, there may be some nervousness this morning around the risk that the UK market might lose one of its largest constituents,” said Russ Mould, the investment director of investment platform AJ Bell.
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AstraZeneca exit is a frightening prospect for the City and the government
The news “does at least hint at the possibility of a more dramatic shift at some point in the future”, Mr Mould said.
There may also be relief that AstraZeneca is not moving from the London Stock Exchange altogether.
“I think there is probably relief that it’s not pursuing a primary listing in New York, but the decision is hardly a ringing endorsement of London,” said Neil Wilson, the UK investor strategist at investment platform Saxo Markets.
“It reflects the fundamental, structural issues in the UK for the largest globally-oriented stocks – the depth and liquidity of its capital markets is falling short of what’s on offer across the pond.”
“It’s also a bit of a knock-back for London”, Mr Wilson said.
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The Cambridge-based pharmaceutical company said the decision to sell shares directly on the New York Stock Exchange – rather than the previous less straightforward system of using American depository receipts – has been made to allow it “to reach a broader mix of global investors” and “make it even more attractive for all our shareholders”.
“The US has the world’s largest and most liquid public markets by capitalisation, and the largest pool of innovative biopharma companies and investors,” the company said in an announcement to investors.
AstraZeneca’s share price was up 0.7% on the news.
Jaguar Land Rover (JLR) has announced it will partially resume manufacturing “in the coming days” after nearly a month in the wake of a cyber attack.
The luxury car-making plants have paused production since 31 August. The cyber attack halted car-making across the supply chain, with staff off work as a result.
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More than 33,000 people work directly for JLR in the UK, many of whom are on assembly lines in the West Midlands, with the largest facility located in Solihull, and a plant in Halewood on Merseyside.
Roughly 200,000 more are employed by several hundred companies in the supply chain, who rely on JLR orders as their biggest client.
“As the controlled, phased restart of our operations continues, we are taking further steps towards our recovery and the return to manufacture of our world-class vehicles,” a company spokesperson said.
The shutdown was said to last until at least 1 October.
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Are we in a cyber attack ‘epidemic’?
“Today we are informing colleagues, retailers and suppliers that some sections of our manufacturing operations will resume in the coming days,” the company added, days on from the partial restart of its IT systems, which allowed supplier payments to recommence.
“We know there is much more to do, but the foundational work of our recovery is firmly underway, and we will continue to provide updates as we progress.”
Over the weekend, the government said it would underwrite a £1.5bn five-year loan guarantee to JLR.
The promise came as the head of the influential Business and Trade Committee of MPs wrote to Chancellor Rachel Reeves, warning small firms reliant on JLR, “may have at best a week of cashflow left to support themselves” with “urgent” action needed to support businesses.
JLR was just the latest business to be the subject of a cyberattack.
Harrods, the Co-Op, and Marks and Spencer, are among the companies that’ve struggled in the past year with such attacks.
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