With bricks-and-mortar retail beginning to reopen across the country, UK retail sales rebounded in June and returned to pre-pandemic levels—but can this recovery be sustained?
Retail sales boost economy in June
With non-essential stores able to reopen from 15 June, UK retail recovered from three consecutive months of decline, posting annual value and volume growth of 1.5% and 1.7% respectively.
At a subsector level, the strongest performances in the month were food and non-store retailing, demonstrating that the recovery continues to be led by essential and online shopping. There were continued declines across fashion, department stores and household goods, as the relaxation of COVID-19 restrictions appeared to offer little respite for these sectors.
Reflecting the subsector trends, there appeared little appetite for consumers to return to physical stores, with the number of consumers visiting the high street decreasing by 71.2% compared to last year, though many stores were only able to open for half of the month.
Online retailing enjoyed another strong month, accounting for more than £3 in every £10 spent by consumers. All subsectors recorded growth, with particularly impressive figures in food and household goods stores, with online sales doubling compared to last year.
Overall, June will be seen as a positive month for retail sales, with a return to growth. The broader backdrop, however, remains challenging, with several retailers reporting difficult trading conditions, face masks now compulsory and growing concerns over a second wave of the pandemic.
Furlough schemes help to keep unemployment low
Unemployment remained flat at 3.9% in the three months to June, with COVID-19 not yet causing the disruption many feared. However, these positive figures are likely to be temporary, and driven by the large number of firms with employees on the government-backed furlough scheme. With the scheme due to end in October, an increase in unemployment looks ever more likely.
Replicating the trends in retail, house price growth rebounded in July, with property prices increasing by 1.5% compared to last year. The average price of UK property is now £220,936. As we enter the second half of the year, the outlook looks positive, with government initiatives such as the temporary increase in the Stamp Duty Land Tax threshold, likely to support demand.