The weight of evidence is increasing that the UK economy is slowing down. Recent employment data shows employers becoming increasingly cautious about employment plans, suggesting fundamental concerns among homeowners when slowing home prices growth.
In addition to today’s contraction in retail sales during May, we have an economy showing signs of weakness in all respects.
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Retail sales fell 2.7%, well below the estimated 0.5% of economists’ contractions as shoppers tightened their belts amid economic uncertainty and inclement weather.
“It’s possible that a crack in consumer spending has finally begun to appear. Retail sales volumes have been much worse than expected in May,” said Charlie Huggins of Wells Club.
“The decline in sales was widely based, confirming that all categories had weakened and reduced online spending as well.
“Food sales were particularly weak, abandoning all profits in April and giving up a little more. There was also another weak month in clothing that suggested that consumers might be cutting discretionary purchases.”
There are many factors behind reading in May. Weather is a big consideration, and price increases also have an impact. However, as with all economic data, it needs to be read further to measure whether May’s decline is a blip or the beginning of a wider trend.
“Whether food inflation is hot or not as hot as in 2023, there is a moment of danger in the supermarket back.
“Weather also plays its role. It’s hard to remember the dark weeks of May, when the UK is enjoying the current swelling temperatures, but drizzle forced people to change bank holiday plans, and many were already using April’s record-breaking sunlight by scattering summer wardrobes and garden furniture.
“While the current weather spells are common for food shops this weekend, concerns about rising gas prices could force people to rethink that extra burger or sparkling wine case.”
