(Bloomberg)—U.K. consumers reined in their spending last month, with online sales bearing the brunt as summer discounts came to an end.
The volume of goods sold in stores and online slipped 0.2%, the Office for National Statistics said Thursday. That compares with economists’ expectations for no change, and comes after increases in June and July. Sales excluding auto fuel fell 0.3%.
Consumers have been a strong point for the U.K. economy as Brexit uncertainty eats away at investment and business confidence. Record employment and rising real incomes are underpinning household spending, the largest part of the economy.
August’s retail sales drop was led by a 3.2% drop in non-store retailing, the most in four years, as online sellers stopped promotions from earlier in the summer. Sales at department stores fell 1.3%, continuing their long-term slump after a rally in July.
Still, overall sales gained 0.6% in the three months through August from the previous period. The sector will add to third-quarter growth as long as it avoids a drop of at least 1.7% in September, the ONS said.
Nevertheless, it won’t be easy for retailers this year as shoppers make fewer visits to brick-and-mortar stores and the crisis surrounding Britain’s departure from the European Union reaches a climax. Next Plc, one of the most successful U.K. clothes sellers this year, reported a slow start to the autumn season on Thursday.
“Although we can see a way through the woods, we are not out the other side yet,” Next Chief Executive Officer Simon Wolfson said in a statement. “Consumer markets remain extremely volatile.”
Canadian ecommerce sales rise
Ecommerce sales in Canada accounted for 3.2% of total retail trade in July, up 32.8% on the year. Retail sales increased 0.4% in July, the first advance in three months, as consumers spent more on new cars, Statistics Canada said Friday from Ottawa. The gain trailed economist expectations for a 0.6% increase. Excluding motor vehicles and gasoline, retail sales fell 0.1% on the month.
The report falls short of economist expectations for a larger rebound and may suggest higher debt servicing costs are hindering consumer consumption. Debt service costs reached a record in the second quarter, leaving consumers with less money in their wallets to spend on other goods.
In volume terms, which strip out the effects of price changes, July sales were flat on the month and the year, which echoed the second-quarter gross domestic product report that showed consumption has been weak. Year to date, volumes have increased 0.8%, slightly less than the 0.84% last year and the slowest pace of growth since 2009, the agency said.
The lackluster showing for retailers “leaves the Canadian economy more dependent on trade and capital spending, with both seen as vulnerable to a global slowdown,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to clients.
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