Published on : Fri, 21 Oct 2005 02:04GMT
by : Sadat Sayeed

LONDON - Retail sales in the UK finally made their way up in September after months of struggle, according to the latest figures released by the Office of National Statistics.

The sales figures for the month of September jumped by more than twice of what was forecast easing fears of continuing weakening of consumer confidence. In recent months, consumer confidence has hit a nadir and it was leading to profits warnings from retailers. Sales rose by 0.7 percent in September as opposed to the 0.3 percent predicted by analysts. However this was not enough to kick start the growth, which remained at 0.7 percent, the lowest since January 1996.

But the sales surge may be enough to kill any thought of a further quarter point rate cut by the Bank of England. Even analysts admit as much, "There is no obvious argument for a rate cut in the near term. Tomorrow's preliminary release for Q3 GDP will give us a further indication of the recent evolution of the UK economy," said Melanie Baker, economist at Morgan Stanley.

September sales were mainly fueled by food stores with an increase of 1.4 percent in total spending over the month. This more than made up for the shocking 1.1 percent fall in August. Sales at textile stores, clothing and footwear stores, and household goods stores also improved showing that the surge was uniformly spread rather than concentrated on one segment alone.

But it was not enough to convince analysts who say that one month's report will not do much to move the markets. “The worry must be that this will feed through into job losses, particularly when bearing in mind that a majority of the jobs created in the UK over recent years has been directly related to the consumer,” said John Butler, analyst at HSBC.