UK retail sales surprises economists
Consumer spending in the UK was seen to have grown in the month of April, bamboozling economists. A forecast of -0.2% was met with a higher figure than in March (1.4% vs 1.2%) and defied expectation of a spending collapse in the UK. The encouraging figures show that whilst things have become much harder for consumers, there is still a willingness to spend. As a services nation, retail sales data is important to our economy and so this is big news in terms of what it could mean for a recession here.
Consumer confidence on the other hand is a bit of a different story. The report for April shows that confidence is at an all-time low, mainly due to the cost of living crisis. The consensus shows that consumers believe current days are darker than the 2008 financial crash, Brexit vote and the covid pandemic. Because of the labour data released earlier in the week which showed record job vacancies and an ultra-low unemployment rate, the reading has done little to dent GBP's value.
Elsewhere, there has been further talk of an ECB rate hike for July, which markets are suggesting is now a likely scenario. The minutes from yesterday's meeting explain that some members are worried of inflationary shock, whereby businesses hike prices and employees demand higher wages. The EUR may gain over 1% if rates are hiked in July and will fall the same if it doesn't arrive. But there is plenty of trading between now and then, which means there is more volatile market swings to contend with first.