INSTANT VIEW 7-UK Nov retail sales fall at fastest since May

LONDON, Dec 17 (Reuters) - British retail sales fell unexpectedly in November, dropping at their fastest pace since May after department stores and clothing retailers failed to repeat October's strong sales, the Office for National Statistics said on Thursday.


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KEY FIGURES FOR UK RETAIL SALES


NOV OCT F'CAST

% MM -0.3 +0.6 (+0.4 pvs) +0.4

% YY +3.1 +3.7 (+3.4 pvs) +3.5


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KEY POINTS

- Biggest monthly fall in retail sales volume since May

- Smallest 3m/3m rise in retail sales volume since May

- Biggest 3m/year-ago rise in retail sales volume since June 2008

- Biggest monthly fall in non-specialised stores' sales since series began in January 1988


ANALYST COMMENTS

ALAN CLARKE, ECONOMIST, BNP PARIBAS

'On retail sales there's no other way of looking at it, it was disappointing, particularly department stores and clothing. It is a volatile indicator from month to month so if we take the average of the last two months then on average it's up by about 0.3 over the two months so that's reasonable but we thought it would have been a bit better than that. So not particularly encouraging going into Christmas.



AMIT KARA, UK ECONOMIST, UBS

'They are clearly disappointing. If anything, given that VAT is set to rise in January, the risk was that people would have brought forward their spending.

'That said, the surveys are providing a mixed picture, so I would wait for at least a couple of months for us to really know what is happening to retail sales and consumer spending more generally.'



GEORGE JOHNS, UK ECONOMIST, LLOYDS CAPITAL MARKETS

'What is quite striking is that the fall doesn't appear to have been driven much by upward pressure on prices. However, I was under the impression the deflator was dipping out which might lean down on the volume numbers. But it seems that the deflator is pretty much static, so it appears to be underlying weakness rather than to do with moves on prices.'



DAVID PAGE, ECONOMIST AT INVESTEC

'The retail sales numbers are very disappointing -- recording contraction where markets had expected a buoyant rise. But we do highlight some of the difficulties in adjusting for price discounts at this time of year and we suspect that the underlying trend in retail activity is firmer than being portrayed at present. '



HOWARD ARCHER, ECONOMIST AT GLOBAL INSIGHT

'They're obviously very disappointing even allowing for the upward revision to the October data, and it does raise questions as to how robust spending is going to be over the critical Christmas period, which is worrying for retailers.

'I still think the economy is on track to return to growth in the fourth quarter but it does raise question marks about how strong any growth will be in the fourth quarter and also whether consumer spending will kick on in the new year.'

'There are still significant factors weighing down on consumers, so the data is slightly worrying. '



ROSS WALKER, UK ECONOMIST, RBS

'Disappointing, most of the surveys had been fairly resilient. The breakdown looks a little strange, this huge drag from department store sales, down 4.4 percent in the month, whereas the numbers we had seen from John Lewis had been really strong.'

'It's a volatile series and this is not the first time we have seen a weak outturn.'

'But the underlying position is still the same, growth of 0.8 in the latest three months. It still leaves us on course for some services growth in Q4.'

'It doesn't really derail hopes of GDP resuming in Q4, but it does suggest, as with the disappointing industrial production figures, that growth is going to be pretty sluggish -- we are not going to see a strong rebound in the final quarter.' Keywords: BRITAIN INSTANT/RETAIL ([e-mail], 00 44 20 7542 8022; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.