UK retail sales much lower than expected in January - as it happened
January high street performance fails to pick up after disappointing December
3.01pm GMT
Despite hopes of a pick-up in high street spending after a poor December, UK retail sales came in weaker than expected in January.
Sales of gym wear improved but food sales fell, according to the Office for National Statistics.
2.53pm GMT
After five days of rises, US markets have edged higher at the start of the week's final trading day.
The Dow Jones Industrial Average is currently up 35 points or 0.14% while the S&P 500 is 0.03% better and the Nasdaq Composite 0.04% higher.
2.08pm GMT
The US housing and import price data and some mixed company results - Kraft Heinz missed expectations, Coca-Cola bettered them - has push the futures into the red.
Reversing earlier gains, the Dow Jones Industrial Average is now expected to open around 13 points lower.
1.42pm GMT
Meanwhile US import prices climbed by more than expected in January, adding to the signs of increasing inflationary pressures.
With increases in the cost of imported petrol and other goods, import prices climbed by 1% last month, compared to a 0.1% rise in December and expectations of a 0.6% increase.
1.36pm GMT
More signs of strength in the US housing market.
Housing starts in January came in at 1.326m units, up from a revised December figure of 1.209m and higher than the expected 1.234. December's figure was initially given as 1.192m units.
USA Housing Starts announcement - Actual: 1.326Mln, Expected: 1.234Mln pic.twitter.com/vx7s3mE9KV
1.21pm GMT
Here's IG's opening calls for the US markets:
US Opening Calls:#DOW 25276 +0.29%#SPX 2738 +0.21%#NASDAQ 6821 +0.36%#IGOpeningCall
12.32pm GMT
US markets are expected to open higher again, with the futures suggesting a 74 point initial rise on the Dow Jones Industrial Average. Craig Erlam, senior market analyst at Oanda, said:
US equity markets could end the week with a full house of gains as long as indices manage to hold onto the small gains being seen in futures ahead of the open.
This would also bring an end to two shocking weeks for equity markets that saw more than 10% quickly wiped off indices, the first time we've seen such a move since the start of 2016. While the prospect of higher yields and interest rates, combined with a surge in volatility, have been blamed for the decline, the rebound we're now seeing reaffirms the belief that fundamentals are still strong which should prevent the situation deteriorating further.
12.21pm GMT
The head of the British Chambers of Commerce has warned companies are facing a recruitment crisis and urged the government to act, in an article for the Guardian:
British companies are facing a recruitment crisis, with labour shortages hitting critical levels in some sectors, according to a business leader who has urged the government to produce details on a post-Brexit immigration system.
Adam Marshall, the director general of the British Chambers of Commerce, said the lack of candidates for some jobs was biting hard, and he warned ministers against bringing forward a "draconian and damaging" visa or work permit system.
Related: Business leader warns May against harsh immigration policy
Related: Businesses are floundering while Whitehall dithers on immigration | Adam Marshall
11.43am GMT
Here's our full story on the UK retail sales. Sarah Butler writes:
January was a tough month for high street retailers as sales rose just 0.1%, far below City expectations, as higher prices continued to deter shoppers from spending.
City analysts had expected a recovery of around 0.5% last month, after the unexpectedly sharp fall of 1.4% in December. The figures from the Office for National Statistics (ONS) indicate a pick up in year-on-year growth to 1.6% in January, from 1.5% in December, but analysts had hoped for a bigger turnaround after a very disappointing end to last year.
Related: UK high street sales stagnant amid January retail gloom
11.03am GMT
Sterling has slipped into negative territory against the dollar, as investors mull over the weaker than expected retail sales.
The pound is down 0.18% at $1.4070 having earlier been as high as $1.4144. Against the euro, sterling is down 0.06% at a1.1264.
11.01am GMT
Commenting on the retail sales figures, Andrew Sentance, senior economic adviser at PwC, said:
The squeeze on consumer spending created by high inflation and a weakened pound continues. Over the three months covering the Christmas and New Year period (November to January), the volume of retail sales was just 0.1 percent up on the previous three months - the weakest growth we have seen on this measure for nearly a year. While inflation continues to run ahead of pay increases, it is not surprising that consumers are cautious and retail sales growth is sluggish.
Looking ahead, we should expect the squeeze on consumer spending from high inflation to ease as we progress through this year. But the economic benefits of lower inflation are unlikely to be felt until the second half of 2018 at the earliest. The first half of this year will continue to be a difficult environment for retailers and other consumer-facing sectors.
10.35am GMT
And the UK research director at Global Data Retail:
ONS retail sales data much worse than expected, though why anyone thought people had suddenly gone on a January shopping spree is a mystery to me. https://t.co/pyDZwr7ZXC
10.33am GMT
Here's the chief UK economist at Pantheon Macroeconomics:
Falling food sales to blame for January's below-consensus UK retail sales. The good news is that supermarkets have largely finished hiking prices due to the weak . But rising mortgage rates and an intensifying fiscal squeeze suggest sales growth will remain sluggish this year pic.twitter.com/AAzQSngAyy
10.06am GMT
Here's breakdown of non-food sales, showing the growth in sports equipment:
10.03am GMT
Following the disappointing retail sales, economist James Smith at ING Bank is not optimistic about the outlook for the sector. But he believes the Bank of England could still raise rates in May :
After what was a particularly tough Christmas trading period for retailers, consumers continued to keep the foot on the brakes through January. Retail sales barely increased in the first month of the year (0.1% rise), suggesting that shoppers were reluctant to heavily participate in the traditional January sales, backing-up separate findings from Visa. For now, we see few catalysts for a sustained rebound in spending over coming months.
Consumer confidence remains depressed (despite some recent improvement) and disposable incomes look set to remain under pressure. True, wage growth has been performing better recently, giving the Bank of England increased confidence that the tight labour market is prompting firms to offer more generous pay packets. That said, it's still early days and we think there remains a risk that some firms take a more cautious stance, amidst slower economic momentum and elevated uncertainty. At the same time, food and fuel costs are continuing to rise, even though in general consumer prices have largely adjusted to the post-Brexit weakening in the pound.
Hopes for a rebound on December's poor UK retail sales results failed to materialise after today's data revealed sluggish growth in January.
UK shoppers continued the theme of keeping their money in their pockets post-Christmas, and weaker than expected data could now have an adverse effect on the pound, which has been heading for its best weekly performance since September.
Who'd be a retailer right now? The ONS sees the longer-term picture for the retail sector as in a "continued slowdown" and the average British consumer is looking at real wage declines, higher borrowing costs, and record levels of consumer deb. The average Brit has spent the past few years living the mantra "When the going gets tough, the tough go shopping" but January's retail sales number shows that UK consumer spending is not as hardy as it once was and this represents a real risk to Q1 GDP already.
9.51am GMT
Here's Societe Generale's Kit Juckes:
UK retail sales ex autos 1.5% y/y, 3-m y/y 1.4%, last time we were at this kind of rate in 2013 GDP growth was 1 1/2% too. This is the new normal. Does leaving Europe doom us to European growth rates?
9.45am GMT
The weaker than expected retail sales numbers have taken the shine off sterling. The pound is now up just 0.1% against the dollar at $1.4108, having earlier climbed as high as $1.4144.
9.40am GMT
Rhian Murphy, Office for National Statistics Senior Statistician said:
Retail sales growth was broadly flat at the beginning of the New Year with the longer-term picture showing a continued slowdown in the sector. This can partly be attributed to a background of generally rising prices.
Growth in the quantity of sporting equipment, games and toys being bought was offset by falling food sales when compared with the same month a year earlier.
9.39am GMT
9.35am GMT
High street sales has dropped sharply in December as shoppers brought forward sales into November to take advantage of discounts including the Black Friday sales.
Taking the three months from November to January, sales edged up just 0.1% after climbing 0.5% in the three months to December.
9.32am GMT
British shoppers kept their money in their pockets in January, with retail sales coming in sharply lower than forecast.
Overall retail sales volumes rose 0.1% month on month, compared to expectations of an increase of around 0.5%. Year on year growth was 1.6%, the highest since August but at the bottom end of expectations of around 2.4%.
9.23am GMT
retail sales due in 10 mins, Barclays are much more downbeat than consensus and look for a 0.6% M/M fall pic.twitter.com/KlhHQx9HFL
9.22am GMT
The pound is heading for its best weekly performance since September, buoyed by a weaker dollar, the expectation of rising interest rates from a more hawkish Bank of England, and hopes that Brexit talks will progress.
Of course, that is before the UK retail sales figures, which could have an influence one way or the other.
9.09am GMT
Ahead of the UK retail sales figures, here is economist Rupert Seggins:
UK retail sales stats out at 9:30. Monthly changes are too volatile to be much signal & changing y/y figures are being distorted by the unwinding of a big base effect (see chart). Suggest focussing on %3m/3m changes. Or just stare at a chart of the levels...like the one below :) pic.twitter.com/koMCw3VwIw
9.04am GMT
After four weeks of falls - including a 4.7% decline last week - the FTSE 100 is on track for a positive five days of trading. Connor Campbell, financial analyst at Spreadex, said:
Despite a week that's been chock full of hawkish data, the markets continued to mount a comeback this Friday, extending the gains made on Thursday hit it a slew of 7 day-plus highs.
The FTSE rose a further half a percent after the bell, allowing the index to tickle 7275. That is the index's best price in around 10 days, with the FTSE finding a way to co-exist with cable's own climb. Against the dollar sterling jumped 0.3%, lifting the pound towards $1.413 for the first time since last Monday. The currency has had less success against the euro, with its current a1.127 levels at the bottom end of the pound's recent range.
8.22am GMT
Markets are holding on to their gains ahead of the UK retail sales figures. Lee Wild, head of equity strategy at interactive investor, said:
Where Wall Street goes, other markets follow, and this bounce back from last week's lows is no different. Traders are quickly getting used to higher bond yields, higher inflation and another round of hikes in global interest rates that will follow, so much so that US stocks are recovering twice as fast as in London. Markets will remain volatile, for sure, but we've just found out that big investors can't stay out of this market for long, and demand for equities typically picks up in the weeks before tax year-end.
8.05am GMT
With Wall Street and Asian markets continuing their recovery after the early February slump, European share prices are off to a good start in early trading.
The FTSE 100 is 44 points or 0.6% better , while Germany's Dax is up 0.49% and France's Cac has climbed 0.55%.
8.01am GMT
Balfour Beatty is trying to shake off the cloud of Carillion, the collapsed UK contractor, and today it has announced a joint venture contract win in the US.
It has been awarded a $1.95bn (1.4bn) deal to design, build, finance, operate and maintain the 'Automated People Mover' at Los Angeles International Airport. Balfour's share amounts to around 420m.
Good news for Balfour Beatty with a major contract award that should help the stock shrug off the cloud of the Carillion mess that has left the shares down more than 10% in the last month...
Despite some setbacks in the share price following the collapse of Carillion, this is yet another sign of the solid progress being made under Leo Quinn and the Build to Last strategy. It's the first major public-private partnership contract win in the US civil infrastructure market - one that could grow significantly in the coming years, particularly if we consider the shape of proposed infrastructure plans. The hope is that Donald Trump's infrastructure spending plan will produce more such contracts for Balfour. Existing heavy US exposure means it is well placed to benefit, although it remains unclear exactly what the spending plan will eventually look like.
7.45am GMT
#Japan's Nikkei decouples from Yen. Index gained >1% despite Yen dropped to lowest level in 15mths. pic.twitter.com/Ic9RCUaTwJ
7.31am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Stock markets continue to recover some of the ground lost during the early February rout, despite further signs yesterday of rising inflation, one of the key factors behind the slump. The concerns about price increases led to a jump in bond yields, and there seems little sign of that ending. So, as Michael Hewson, chief market analyst at CMC Markets UK, put it:
The fact that stock markets appear to have recovered their equilibrium when rates are now higher than when markets first sold off, does make you question why the sell-off happened in the first place.
European Opening Calls:#FTSE 7259 +0.33%#DAX 12386 +0.33%#CAC 5236 +0.26%#MIB 22561 +0.29%#IBEX 9766 +0.52%
The UK had a pretty rotten month in December, with a slump of 1.5%, though that was largely as a result of bumper November number of 1.1% which had been boosted by Black Friday sales spending.
Recent retail sales numbers from the British Retail Consortium and KPMG earlier this month appeared to show that while some retailers were struggling we did see a pickup in January, as consumers started to re-open their wallets after a slow December. The recent cold weather in January may well have also prompted an increase in demand for coats and gloves, with an expectation that we could see a rise of 0.6%.
The pound wasted little time capitalising on the weaker dollar and continued to charge higher passing $1.41 overnight. Investors will now turn their attention towards UK retail sales due this morning at 09:30 GMT. Analysts are expecting retail sales to have increased 2.4% year on year in January, up from 1.3% in December. Given the hawkish tone from the Bank of England earlier this month, in addition to the higher than forecast CPI data, a higher reading in retail sales could see the pound target its previous high of $1.4375.
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