UK shopping, house prices and hiring rise in post-election pick-up

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UK shopping, house prices and hiring rise in post-election pick-up

British shoppers, home-buyers and employers grew more upbeat last month, as reports of the biggest rise in high-street sales since 2014 and the largest increase in house prices in nearly two years added to signs of a post-election bounce.

However, there were warnings that the upturn might not last and instead reflected a temporary blip after political uncertainty around Brexit and December’s election weighed on activity for much of the final quarter of 2019.

Accountancy firm BDO said its monthly gauge of the high street found sales jumped by 5.7% last month, the biggest annual rise since January 2014, with gains across all sectors.

Until now there has not been a clear sign of a post-election improvement in the mood of consumers similar to the increase in confidence among businesses. BDO warned that the January sales surge might not last, as retailers were sitting on high levels of stock and purchase orders had fallen again, suggesting discounting was driving sales.

“This may be a false dawn in terms of a high street recovery,” Sophie Michael, a partner at BDO, said.

Last week the Bank of England held off from cutting interest rates, despite stagnation in the economy in late 2019, to see if signs of recovery since Prime Minister Boris Johnson’s election win persisted.

Halifax, part of Lloyds Banking Group and one of Britain’s biggest mortgage lenders, reported that house prices rose at their fastest annual rate since February 2018 last month, up by 4.1% after a 4.0% rise in December. But it gave a similar warning to BDO on Friday about whether the increase would be lasting.

“It’s too early to say if a corner has been turned,” Halifax managing director Russell Galley said. “The recent positive figures may actually represent activity that would ordinarily have been expected to take place last year, but was delayed by economic uncertainty.”

Employers remain upbeat, suggesting that there should be some resilience to consumer demand. The index of permanent job placements from the Recruitment and Employment Confederation hit its highest level since December 2018 at 52.3, up from 51.9 in December.

“It’s good to see that businesses have grown in confidence over the past two months and taken the opportunity to restart hiring,” REC chief executive Neil Carberry said. But there were less positive signals in the REC survey too. Starting salaries for permanent staff grew at the slowest rate since July 2016, immediately after the Brexit referendum.

The REC report also showed temporary staff hiring fell for the first time since 2013, possibly reflecting concerns about reforms aimed at tackling tax avoidance that is likely to affect temporary workers.

Source: Reuters