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Strong retail sales underpin rise in UK GDP: ONS

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Strong retail sales helped to lift the UK economy in the early months of this year, the ONS said today.

The ONS today estimated GDP grew by 1.5% in the three months to April 2021. This, it said, was “mainly because of service output, boosted by strong retail sales over the three months.” In April alone, it’s estimated to have grown by 2.3%. 

Retail sales rebounded in April, after non-essential shops were able to open on April 12 from the third lockdown. 

The ONS Retail Sales report for April 2021 estimated that 30% of retail sales took place online in April, down from 34.7% the previous month. The fall came as UK retail sales rebounded in April by 9.2% compared to the previous month – and by 37% compared to the same month a year earlier. Spending patterns suggested that came as shoppers went in-store to non-essential shops to buy. 

The April retail sales figures suggested the pandemic had moved sales further online than they were previously. Non-store retailing, a category dominated by pureplay retailers, reported online growth of 56% compared to pre-pandemic April 2019, as shoppers moved online to buy during Covid-19 lockdowns and restrictions affecting retail. Online sales fell by 5.6% compared to March, and grew by 31.9% compared to last April. Food ecommerce sales fell by 11.4% on last month – likely affected by the partial reopening of hospitality – but were 16.5% higher than a year ago. They accounted for 10.5% of retail sales in the category. Non-food online sales fell by 9.8% on the previous month, having grown by 37.2% on the month before that. 

Today’s ONS GDP figures suggest that services output grew by 1.4% in the three months to April 2021, led by retail sales. 

Commenting, Jay Mawji, managing director at online trading provider IX Prime, says: “Hopes that the UK economy would break into a US-style sprint have been dashed. The overall pace of growth is holding up well, notching up to the fastest rate since last summer’s intra-lockdown recovery. But growth is completely one-sided, with the UK’s services sector doing all the heavy lifting.

“Consumers returned to the high street in strength in April, sending retail sales volumes soaring by 9.2% compared to March, while consumer-facing services posted growth of 12.7%. This more than made up for the declines seen in production and construction output, but nevertheless the overall picture is of an economy trying to accelerate on a road strewn with potholes. Progress is halting and occasionally painful.”

Debbie Porter, MD at Derbyshire-based Destination Digital Marketing, says: “We’ve had a really busy April and May, fielding new enquiries and taking on new business. For the first time it feels like the promised ‘bounce back’ might actually be happening. However, it’s a very tenuous positivity. All being well, all the increased activity we’ve been experiencing is great news for the economy, but we still have to hit the June 21 milestone successfully. 

“With the Indian variant of Covid picking up pace, there’s no saying what will be announced on the 21st, which could throw everything up into the air once again. The end of the furlough scheme and the announcement on June 21 are intrinsically linked. Businesses that are so positively stepping forwards right now could have the rug pulled from under them if each hand by the Government isn’t played exactly right.”

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