As the UK market is getting ready for a long bank holiday weekend (Good Friday and Easter Monday), the latest retail sales figures were released this morning and showed an unexpected jump, up 1.6 per cent over the first quarter of 2019. The Office for National Statistics revealed the surge in spending at food stores and at “non-store retailing” (Internet sales) but sales at department stores have significantly decreased, shrinking by 0.3 per cent year-on-year in March, even though total retail sales had surged by 6.7 per cent. The overall data is however exaggerated as the comparison with last year’s results isn’t fair: while the adverse weather caused by the Beast from the East in March 2018 discouraged consumers to spend, last month’s mild weather boosted sales. Therefore, the pound started strengthening when the figures were released but quickly bounced back, now trading below 1.16 against the EUR and around 1.30 against the USD.
Meanwhile, the data firm IHS Markit has reported that France’s manufacturing sector is stagnating as its factories continue to suffer from declining output, at the fastest rate in four years. New orders continue to fall and export demand remains weak but the French service sector appears to perform better so, combined, the flash composite PMI has risen to exactly 50.0 (meaning stagnation – below 50 means contraction, above 50 means expansion). There was more bad news from Europe, as Germany’s economy ministry revised its growth forecast lower.
Finally, data firm Markit has just reported that growth across America’s private sector companies has slowed sharply this month, to a 31-month low. With exports rising marginally and a weaker demand, the manufacturing sector remained weak but “growth in the service sector has now also slumped to a two-year low”. The impact on the USD was however very limited.
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