Retail sales hit as consumers watch Olympic Games

Group Business Editor

Friday 21 September 2012

UK retail sales volumes fell 0.2% month-on-month in August, official data revealed, with the London 2012 Olympic Games cited as a factor that dampened trading.

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Ian Mcconnell BUSINESS EDITOR

The figures confirm that hopes earlier this summer that the Olympics would boost retail activity were wide of the mark.

Online sales tumbled between July and August.

The Office for National Statistics said feedback from online retailers "suggests that sales were lower as consumers watched the Olympics instead of shopping online".

Sales volumes in the "non-store" category, within which online retailing falls, plunged by 6.7% between July and August. This was the steepest fall in sales volumes in this category in any month since December 2007.The proportion of retail sales transacted online fell from 9% in July to 8.1% last month, the lowest since August 2011. The fall in sales volumes in August also appears to signal continuing pressure on consumers, who have suffered a tumble in confidence amid swingeing UK Government spending cuts.Samuel Tombs, UK economist at consultancy Capital Economics, said: "While the Olympics appears to have created some winners and losers on the high street, August's official figures show that the Games failed to provide an overall boost to retail spending."Mr Tombs added that some of the weakness in overall retail spending "may be temporary", with a leap in petrol prices in August having potential to be reversed given a subsequent fall in oil prices. He also said the fall in retail sales in August might reflect a switch by consumers to spending more "off the high street" during the Olympics, in the likes of hotels and restaurants.Mr Tombs observed retail sales in August were still 0.6% higher than in May, "suggesting they are likely to contribute to a brief return to positive GDP [gross domestic product] growth in the third quarter".But he added: "With consumer confidence still very weak and inflation set to outpace earnings growth for another six months or so, we would not be surprised to see further falls in retail sales in the coming months."A survey yesterday from the Confederation of British Industry showed a modest improvement in manufacturers' overall order books this month. Export order books also improved.And manufacturers are, overall, predicting a modest rise in output over the coming three months.Anna Leach, CBI head of economic analysis, said: "Domestic and overseas demand have improved in this survey following last month's falls, providing a foundation for somewhat better output growth expectations. "But uncertainty is expected to build through the autumn – with key decisions to be made in the eurozone and the approach of the US fiscal cliff – meaning that conditions are likely to remain difficult for UK manufacturers."

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Retail sales hit as consumers watch Olympic Games

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