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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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From: zonder	1/21/2005 5:26:38 AM
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No Santa Claus Effect In UK Retail Sales in December Dec Nov Retail sales m/m -1.0% 0.6% Retail sales y/y 3.2% 5.9% R from 6.1% Clothing m/m -1.7% 0.4% Household goods m/m -1.2% 1.4% Food Stores m/m -0.6% 0.4% Non-food stores m/m -1.4% 0.7% Other stores m/m -0.9 -0.1% UK retail sales in December were substantially weaker than anticipated in December, (market consensus expected +0.3%) coming in at -1.0% m/m. We hesitate to use the economist's favourite negative cliche "collapse" because an annual rate of growth of 3.2% is entirely healthy in a European context , even if it is well below what the UK economy itself has experienced in recent years. A better guide to underlying trend is given by the three months to December over the previous three months measure and this came in a a rate of +0.3%. If we persist with this 3m/3m measure of momentum, the 3 months rate in December of 0.3% compares to a 1.1% rate in November and a rate of 1.8% in July. Although clothing stores experienced greatest difficulties in December (-1.7% m/m), all categories of store were in negative territory on the month. Conclusion: The policy implications of this data should be interpreted in light of Mervyn King' speech (see our earlier note). King argued very strongly that one should not attribute too much weight to the volatile December retail sales data and that, "...the true meaning of the Christmas story will not be revealed until Easter - or possibly much later." UK interest rates are firmly on hold, we believe until the second half of this year - when we expect easing to begin.

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