UK High Street fails to light up
In the UK, the latest reading from the high street failed to show the expected pick-up in sales following a weak October. Retail sales (exc. fuel) rose by just 0.1% in November, below the consensus forecast of 0.4%. Despite a sharp improvement in consumer confidence, people have not translated this into household expenditure as real incomes are still being squeezed. It has said that online shopping continues to increase and now accounts for 10.8 percent of all retail sales. Britons spent an average of 711 million pounds ($1.2 billion) a week online in November, an 8 percent increase from a year earlier.
Meanwhile, a report published yesterday by the U.S. Commerce Department showed consumer spending rose in November as Americans shopped for the holidays. Household purchases increased 0.4 percent after falling 0.2 percent in October. Sales of previously owned US homes rose in November to their highest level in three years. Other reports on the world’s largest economy due today may show home sales and demand for long-lasting goods rose.
On the markets, a lack of progress in the US on the fiscal cliff negotiations has made international investors more nervous and hit risk appetite. Equity markets have closed lower overnight while EUR/USD has consolidated at the $1.32 level. With the UK’s credit rating a more prominent issue, Sterling will be sensitive to this morning’s latest figures on the public finances.