Festive cheer on the high street

Retailers have begun to report their Christmas takings, with John Lewis enjoying another fruitful year.

Retailers began to report their Christmas trading figures this week. Retail sales account for 6% of GDP and are a key gauge of overall consumption, which accounts for the lion's share of the economy.

John Lewis impressed analysts with a 7% year-on-year rise in sales for the five weeks to 28 December. Store sales gained only 1.2%, but online sales were up by over a fifth. House of Fraser posted a record Christmas. Debenhams, however, suffered weak Christmas trading, prompting a profit warning.

What the commentators said

Overall spending appears to have held up fairly well, however. Boxing Day saw a new record spending spree of £2.7bn and online sales that day jumped by an annual 40%. Consumer spending growth, buoyed by falling unemployment, the housing market recovery, and households dipping into their savings, could have reached its highest level since 2007 in 2013, according to Capital Economics. And there is scope for further improvement this year: real incomes should finally begin to rise as inflation subsides.

Here we go again a consumer-led rebound, said Allister Heath in City AM. The government forecasts that consumption will contribute 1.2% of the 1.4% growth likely for 2013, and half of this year's growth of 2.4%. Business investment and housebuilding are finally expected to improve this year, "but insufficiently".

Our current account or trade deficit is also a drag on growth. George Osborne has achieved growth, but its composition is not a sustainable basis on which to rebuild the economy.

Recommended

Beyond the Brexit talk, the British economy isn’t doing too badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Are we losing the moral high ground on Covid?
UK Economy

Are we losing the moral high ground on Covid?

Not only must we never see more than five other people at the same time, we must report those who do to the police, says Merryn Somerset Webb.
17 Sep 2020
James Ferguson: How bad data is driving fear of a second wave of Covid-19
UK Economy

James Ferguson: How bad data is driving fear of a second wave of Covid-19

Merryn and John talk to MoneyWeek regular James Ferguson about the rise in infections in coronavirus and what the data is really telling us.
17 Sep 2020

Most Popular

Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
Central banks want politicians to take charge – but what will they do?
US Economy

Central banks want politicians to take charge – but what will they do?

The US Federal Reserve has come to the end of the road in terms of what it can do to accelerate any recovery, says John Stepek. It's over to the polit…
17 Sep 2020
IAG's share price is ready for take-off - here's how to play it
Trading

IAG's share price is ready for take-off - here's how to play it

The owner of British Airways has had a turbulent year, but is now worth a punt. Matthew Partridge explains the best way to play it.
8 Sep 2020