December 19, 2013 / 2:21 PM / 6 years ago

Retail sales edge up in Nov but shoppers still holding back

LONDON (Reuters) - British retail sales rose in November but failed to make up for a sharp fall the previous month, suggesting weak growth in earnings is weighing on consumers despite signs of a recovery in the economy and jobs market.

Retail sales volumes rose 0.3 percent from October as cold weather prompted shoppers to buy warmer clothes, official data showed on Thursday. But October’s sales were revised down to show a fall of 0.9 percent.

Economists had expected shoppers to keep a grip on spending ahead of the Christmas holidays this month, with the steady decline in living standards also weighing on many people.

Hopes that Britain’s economic recovery is deepening got a boost on Wednesday when data showed a surge of hiring and a big fall in the unemployment rate.

But the data also showed wages rose less than 1 percent in the three months to October, well short of inflation of 2.1 percent in November.

“The foundations for a sustainable rise in spending should be stronger in 2014, with real earnings on course to start growing again and employment continuing to rise,” said Martin Beck at Capital Economics.

“For now, though, consumers are still spending fairly cautiously.”

The less volatile three-monthly reading showed sales were unchanged. In annual terms, retail sales were up 2.0 percent, the Office for National Statistics said.

Economists in a Reuters poll had expected retail sales to rise 0.3 percent on the month and for sales to be 2.3 percent higher on the year.

Textiles, clothing and footwear sales volumes jumped 3.8 percent in November from October, the ONS said.

That helped offset a fall of 3.1 percent in department stores sales and weaker fuel sales.

At the same time, a record amount of goods were bought online, accounting for 11.9 percent of all retail sales, excluding fuel.

Earlier this month, the British Retail Consortium, an industry group, said sales in November made a slow start to the month but picked up as colder weather prompted consumers to shop for warmer clothes.

On Wednesday, another survey, by the Confederation of British Industry, suggested retail sales rebounded in December as shoppers started splashing out for the Christmas holidays after a weak November and October.

Demand from consumers remains the main driver of Britain’s economy. Household consumption contributed 0.5 percentage points to economic growth of 0.8 percent in the third quarter.

“Unless earnings start to grow more rapidly, the modest trend may continue, and we may yet see a post-Christmas hangover,” said John Zhu, an economist with HSBC.

Writing by William Schomberg; Editing by Hugh Lawson

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