May’s retail sales figures are a slight disappointment after the ‘fireworks’ of April’s spending splurge, says Jonathan Sparks, CIO, UK and Channel Islands, Private Banking and Wealth Management at HSBC:
The broader picture suggests that consumers released pent up demand for the high street in April but then moved on to socialising and eating out in May, as restaurant bookings surged and pubs re-opened.
Even with today’s blip, retail sales are 9% higher than before the Covid pandemic and 15% up from January’s low.
He also points out that the rise in the Delta Covid-19 variant could hurt the retail sector:
The FTSE 350 Retail index has pulled back from the May high, as the Delta variant became more established, throwing some doubt on whether the pace of consumer spending can be sustained. We’ll have to wait and see how this unfolds in the coming weeks, but for now there is enough positive economic momentum to justify our positive outlook on UK stocks.”