United Kingdom Retail Sales Surpass Market Expectations!

Daily Forex Fundamentals | Written by ecPulse.com | Jul 23 09 11:33 GMT |

Today we saw in the UK that retail sales beat market expectations and this flood the economy with optimism as higher sales usually indicate more confidence that consumers have for their nation while also the discounted merchandise attracted customers which helped boost retail sales. The Office for National Statistics (ONS) released retail sales for the month of June coming in at 1.2% which is higher than both the projected reading of 0.3% and the revised May's reading of -0.9% from -0.6% while on the year the indicator also climbed to 2.9% which is better than the revised previous reading of -2.0% from -1.6%, this also beat the forecasted reading of 2.1 percent. The rise in the data surprised markets as everyone assumed the surging unemployment rates would pare spending in the nation because with more jobless Britons, this meant that there were more pocket squeezed consumers trying to survive at a time of economical recession. Next to the mounting of job losses, there was crippled consumer confidence and with lack confidence, comes lower spending levels because consumers usually tend to save when they are not sure about the economic outlook of their nation, but today the story differs as despite the soft labor market, consumers were looking forward to actions that were taken by officials to stimulate economic growth. The central bank is buying gilts using newly printed money worth 125 billion pounds to recover the nation while easing the pace of contraction, from our data today; we see that the measures have supported retail sales as consumers are spending and helping the economic flow of money, which is what the nation needs now to find recover. As retail sales are improving therefore this is helping economic growth while already we are seeing that GDP second quarter reading is easing its contraction in which expectations show us tomorrow this reading will improve to -0.3% from the prior first quarter contraction of -2.4%, which marked the worst quarter since 1958. Also released today, was the British Bankers Association releasing their loans for home purchases showing that 35,235 were approved for loans which is higher than the revised prior reading of 31,919 from 31,162. This reading marked the highest since March 2008. The upbeat data is also supporting the fact that the housing sector is finding its bottom as lending is slightly improving, which again hints that the government interventions and BoE measures are supporting major sectors in the nation step out of misery as they undergo the worst financial crisis since the Great Depression. Since lately we have been seeing that conditions in the UK are improving as a result of the APF program, from my point of view, the central bank should continue to buy gilts and then pull out the money from the markets when the nation recovers by hiking rates to attract savings which will avoid inflation rates from rising. The upbeat continues to chime with other data that the worst of this recession in the UK is over, but a full economic recovery will be delayed until the banking systems stabilize. Turing to the UK stocks, we see that they are slightly declining as the British water regulator suggested reducing water bills, and this caused investors to sell water utility companies which weighed on the FTSE-100. The index as of 11:17 GMT shed 16.25 points or 0.36% to 4,477.48 points. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk