Are British shoppers brushing off Brexit and splashing the cash?

August 17, 2016

Shoppers cross the road in Oxford Street, in London, Britain August 14, 2016. Photograph taken on August 14, 2016.   REUTERS/Peter Nicholls - RTX2L5JV

British retail sales figures for July could pleasantly surprise economists after data on Wednesday showed the country’s labour market performed much better than expected in the month after the Brexit vote.

According to the median in a Reuters poll, household spending, a pillar of Britain’s economy, was 4.2 percent up in July compared to the year before but the highest forecast was for a 5.2 percent jump.

“While it is too early to assess, the initial indications suggest that investors may be a bit too pessimistic about the prospects for consumer spending in the UK post-Referendum,” Barclays, who along with two other banks has the highest forecast, told clients.

In the five weeks to July 2 sales dropped by 0.9 percent and forecasts for last month were wide, ranging from a 1 percent fall to a 1.2 percent increase. The median was for a 0.2 percent pick up.

Weather, often labelled a key factor affecting sales, was to blame for June’s biggest monthly drop since the end of 2015 rather than the European Union membership referendum, stores said, and early indications suggest the vote has yet to stop people spending.

Sales promotions and July’s good weather outweighed concerns Britain’s vote to leave the EU on June 23 would deal an immediate hit to the economy, according to the British Retail Consortium.

It reported last week retail spending in July was 1.9 percent higher than a year earlier and British shops including Tesco, Next and John Lewis say they have so far not been affected by the shock referendum result.

Retail sale

A survey by card company Visa, published earlier this month, also said spending picked up in July.

The number of people claiming unemployment benefit in Britain unexpectedly fell in July. Benefit claimants fell by 8,600 in the month, compared with an increase of 900 in June, and there was only a small fall in the number of jobs employers were trying to fill, the Office for National Statistics said on Wednesday.

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