Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Retail sales volumes in the UK rose by just 0.3% in December from the previous month, according to data from the Office for National Statistics released just now. Economists had expected a 1.2% gain. In the fourth quarter, retail sales fell 0.4% from the previous quarter.
Clothing sales jumped 21.5% after a 19.6% drop in November when non-essential stores were closed because of coronavirus restrictions.
In 2020 as a whole, retail sales (measured by the quantity bought) fell by 1.9% when compared with 2019, the largest year-on-year fall on record, as multiple coronavirus lockdowns led to widespread store closures. Online sales surged, however, to the highest on record.
Clothing stores (down 25.1%), petrol stations (down 22.2%), “other stores” (down 11.6%) and department stores (down 5.2%) all recorded record annual declines in sales volumes last year when compared with 2019. However, non-store retailing – online and mail order sales – saw a record annual increase of 32% for 2020.
Jonathan Athow, deputy national statistician for Economic Statistics, says:
December’s retail sales increased slightly, driven by an improved month for clothing sales, as the easing of some lockdown measures for parts of the month meant more stores were able to open. Food store sales this month were subdued as retailers reported lockdowns and restrictions on the sale of non-essential items impacted on footfall.
Retail sales for 2020 saw their largest annual fall in history as the impact of the pandemic took its toll. Clothing retailers fared particularly badly, with a record annual fall of over 25%, while movement restrictions led to a record year-on-year decline for fuel sales.
Some sectors were able to buck the trend in 2020. The increased popularity of click and collect and people buying more items from home led to a strong year for overall internet sales, with record highs for food and household goods sales online.
Separate data showed that government borrowing rose last month to the highest December borrowing ever, and the third-highest borrowing in any month since records began in 1993. Public sector net borrowing amounted to £34.1bn in December, £28.2bn more than in December 2019, the ONS said.
Asian shares came off record highs amid profit-taking after a recent rally driven by hopes of more stimulus under the new US president Joe Biden. Japan’s Nikkei fell 0.4% and Hong Kong’s Hang Seng lost 1.3%. MSCI’s broadest index of Asia pacific stocks outside Japan was up 0.7% at 724.59, not far off the all-time high of 727.31 hit on Thursday.
European stock markets are set for a muted, slightly negative open, pressured by worries over extended coronavirus lockdowns.
Michael Hewson, chief market analyst at CMC Markets UK, says:
Yesterday’s European session turned out to be a disappointing one, despite a positive start, as stocks struggled for direction against a backdrop of short-term economic pessimism and a recognition that the European Central Bank was happy to sit on the sidelines for the time being. There were plenty of reasons to be uncertain with EU leaders considering internal border closures due to rising infection and death rates, as various governments weighed extending their various lockdown restrictions further, in an attempt to prevent the overwhelming of their health services.
The actions of President Biden in looking to bear down on the virus with a raft of executive orders appear to be helping boost US stock markets, as the new US administration takes action to combat the spread of the virus, as well as boost the vaccination program, with the tech heavy Nasdaq leading the way.
If US investors do have concerns about a regulatory crackdown on the tech sector, they don’t appear to be too concerned about it at the moment.
On Wall Street, the Dow Jones slipped 0.04% to 31,176 on Thursday, while the Nasdaq gained 0.55% and the S&P 500 edged 0.03% higher. US stocks hit record highs the previous day when Biden was inaugurated.
Oil prices are falling, retreating further from 11-month highs hit last week, on fears that new coronavirus restrictions in China will reduce demand for crude. China is the world’s biggest oil importer. Brent crude, the global benchmark, is down 1.14% at $55.46 a barrel while US crude has lost 1.24% to $52.47 a barrel.
Later this morning, we’ll be getting the flash estimates for the closely-watched PMI surveys for the manufacturing and service sectors, and the overall readings for January, for France, Germany, the eurozone and the UK, followed by the US in the afternoon. They will give us a first glimpse of how economies have fared in the new year, with fresh lockdowns in place.
- 8.15am GMT: France Markit Manufacturing/Services/Composite PMI Flash estimate for January
- 8.30am GMT: Germany Markit Manufacturing/Services/Composite PMI Flash for January
- 9.00am GMT: Eurozone Markit Manufacturing/Services/Composite PMI Flash for January
- 9.30am GMT: UK Markit Manufacturing/Services/Composite PMI Flash for January
- 2.45pm GMT: US Markit Manufacturing/Services/Composite PMI Flash for January
- 3.00pm GMT: US Home sales for December