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Retail Sales In The Spotlight

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Retail sales in the spotlight

Unusually sunny weather looks set to have boosted retail sales last month but a change in the way the official figures are calculated means uncertainty over the outcome is unusually high.

The Office for National Statistics said last week it would rebase the series, introduce "chain linking" and improve seasonal adjustment as from Thursday's release.

The statistics office, which collects data from 5,000 retailers across the country each month, said the changes could knock as much as 1.5 percentage points off the annual volume change for the most recent months.

Under the new methodology, March's 1.5 percent annual rise in sales volumes would show a gain of 1.2 percent, while February's annual 0.4 percent increase would show a fall of 1.1 percent.

"The new calculation method revises sales growth downwards over the past 18 months," said Michael Saunders, chief UK economist at Citi.

"We expect retail sales to rise again in April, but caution that this forecast reflects seasonal factors that are unlikely to persist."

The median forecast of economists polled by Reuters is for sales volumes to have risen 0.5 percent on the month and 2.3 percent on the year in April.

The poll was updated after the methodology change was announced and resulted in a 0.2 percentage point downward move in the median annual forecast. There was no change to the monthly forecast.

NEW AND IMPROVED

Britain's official retail sales figures have been criticised for producing surprisingly strong outturns even as the country has tipped into its deepest recession in a generation.

Analysts broadly welcomed the changes, even though they acknowledged the data would still paint a more upbeat picture over the past year than most surveys.

Chain linking is a statistical technique designed to better reflect trends in sales, picking up instances when consumers switch to buy goods that have fallen in price. This typically reduces sales volumes.

After doom-and-gloom readings earlier in the year, surveys from both the Confederation of British Industry and British Retail Consortium showed a sharp pick-up in sales growth in April.

While overall consumer spending is still being squeezed, retail sales -- which account for around 40 percent of total consumption -- have shown resilience.

"There appears to have been something of an underlying improvement in sales, probably related to the recent increase in households' disposable incomes as mortgage payments and energy prices have fallen," said Jonathan Loynes at Capital Economics.

"On balance it seems reasonable to expect a relatively strong monthly rise in the official measure in April."

"Chain linking"? This must be how McSpamish calculates his net worth.

But really folks, if people haven't the foresight to pay down the rate drop differential on to their mortgage and are buying cheap plastic crap to impress their neighbours, well.... you know.

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Guest DissipatedYouthIsValuable

I love the smell of recovereh in the morning.

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I love the smell of recovereh in the morning.

There is only so much crap you can put on the green shoots before you realise all you are growing is weeds.

M&S figures speak volumes, as do car sales. The UK is cutting back and big time, because so many have lost jobs building/selling/financing and ultimately investing in house sales.

3 Cheers for the knowledge based economy that never really existed. HIP HIP!

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BBC News Pravda

BREAKING NEWS........BREAKING NEWS...... Tractor production has risen 300% in the past year. All our targets will be reached and the five year plan will be a complete success.

Glory to our Dear Leader Comrade McStalin!

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