For months they have been described as cash-strapped, hard-pressed, struggling and wary but yesterday Britons suddenly appeared ready to answer calls from Westminster and the City for a consumer-led recovery.
After April’s high street washout, a month in which retail sales slumped and speculation spread that the Bank of England would have to approve yet more fiscal stimulus for an ailing economy, shoppers reacted to May’s heatwave with an unexpected splurge.
Spending in stores rose 3.4 per cent in May, according to the BRC-KPMG Retail Sales Monitor, after a 1 per cent decline in April — a slide that, according to the Office for National Statistics, was a 2.3 per cent drop on March figures.
The numbers were better than expected and will have been welcomed by central bankers and retail industry chiefs alike, both of whom are hoping that the summer of celebration already under way will lift spirits that otherwise would be laid low by stubborn inflation and the double-dip recession.
According to the survey, children were the big winners from the early summer shopping spree, with their shoes and clothes proving the “standout performer”.
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Howard Archer, the chief European and UK economist at IHS Global Insight, said that the figures gave the economy a “fighting chance” of avoiding another quarter of falling output, adding that the data would raise hopes that “consumers do have some life in them”.
Stephen Robertson, director-general of the British Retail Consortium, said that even temporary respite was welcome news for stores: “As the relentlessly difficult underlying conditions continue to make trading tough for retailers, any temporary boost is of even greater importance and retailers had plenty of reason to celebrate the eventual arrival of summer at the end of May.”
Nevertheless, there is lingering concern over the effect of rising prices and stagnant wages. Helen Dickinson, KPMG’s head of retail, said: “Retailers are hoping that the Jubilee celebrations will have helped to pull them out of the mire, but a short-term patriotic spending spree will not overcome the underlying difficulties facing the industry.”
Less hopeful sounds emerged from the construction industry, which suffered its biggest fall in confidence since 2009 after new business petered out. The Markit/CIPS construction PMI index dropped to 54.4 in May, from 55.8 in April, as companies found it difficult to attract new business against a gloomy economic backdrop.
While the sector was still growing, this was the slowest pace of expansion in three months and those that managed to entice clients to open their wallets had to be competitive on pricing. This pushed confidence among construction companies down to its lowest level since October.
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David Noble, chief executive at the CIPS, said: “Reports of the UK’s return to recession appear to have delivered a blow to general confidence in construction, with this month’s PMI posing some big questions for the sector.”