21st May 2015
Sterling was delivered a boost on Thursday, May 21st, when retail sales data in the UK smashed expectations. Meanwhile, European shares continue to trend lower after German PMI data disappointed.
Germany’s DAX and the French CAC 40 posted modest declines around 0.3 per cent on the news, but the UK FTSE-100 flirts with neutral.
The British pound leapt nearly one per cent against the dollar after the Office for National Statistics (ONS) reported that retail sales soared by 4.7 per cent in April 2015 compared to April 2014. In addition, month-on-month data showed sales jumping by 1.2 per cent.
As the numbers were driven by a surge in clothes, textiles and footwear sales, analysts suggest that the early period of warm weather sent shoppers to the high streets to look for summer outfits.
The ONS also noted that average store prices, including petrol, declined by 3.2 per cent compared to April 2014, the tenth month of consecutive falls, which could also have helped to drive retail sales higher.
Elsewhere, the flash eurozone PMI composite output index declined to a three-month low of 53.4 in May, down from 53.9 in April.
While most of the euro periphery are seeing their best quarterly performance since the global financial crisis, countries such as Germany and France are dragging the index lower.
Germany’s flash PMI data showed the composite index sinking to a five-month low of 52.8, pressured lower by weak demand and rising cost pressures. However, the flash composite PMI for France edged up to a two-month high, but conditions remain tough.
“The survey results suggest the German economy is on course for a reasonable expansion of 0.4 per cent in the second quarter, but France is likely to struggle to see growth exceed 0.3 per cent,” said Chris Williamson, chief economist at Markit.
“However, it’s outside of these two ‘core’ countries where the main action appears to be, with the rest of the region enjoying its best quarter of economic growth and job creation for almost eight years,” he added.
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