LONDON--Sales by British retailers dipped in June, casting a shadow over earlier signs that U.K. consumers were willing to give a boost to the economy during the rest of the year.
U.K. retail sales fell 0.2% compared with May, the Office for National Statistics said Thursday. This missed expectations from economists polled by The Wall Street Journal, who were expecting volumes sold to rise at a strong pace. However, the ONS pointed out that sales still grew 4% on the year, making it the 27th consecutive month of annual growth.
The drop was especially felt in food stores and gasoline stations, but official figures showed weakness in a wide range of other products as well--including computers, toys and jewelry.
A gloomy June for retailers dampens earlier indicators that consumers were feeling increasingly upbeat about the economy. Surveys showed a surge in business and consumer confidence after the general election in May, suggesting political instability could have been partly responsible for the slight slowdown in activity during the first quarter of the year. Economists were also expecting sunnier weather to be a boon for British stores in June.
The performance of the services sector is paramount for the U.K. economy, as manufacturing and construction are struggling to keep momentum going. Services make up almost 80% of Britain's annual national output and their importance has actually increased as the country emerged out of the downturn.
Nevertheless, there are encouraging signs for retailers in the medium term, as fatter paychecks are set to encourage people to spend more.
According to the ONS, average weekly earnings--including both regular pay and bonuses--increased at an annual 3.2% between March and May, the fastest pace in more than five years. Gains in living standards are even greater when inflation--which edged back to zero in June--is taken into account, as the plunge in the global cost of oil has subdued prices across the world.
Write to Jon Sindreu at jon.sindreu@wsj.com and Jason Douglas at jason.douglas@wsj.com
(END) Dow Jones Newswires
July 23, 2015 04:39 ET (08:39 GMT)
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