Friday preview: UK retail sales data, China GDP

UK retail sales data will be under the microscope on Friday amid worries that an increase inflation and Brexit uncertainty will deter shoppers.

Economists estimate the Office for National Statistics will reveal retail sales fell 0.4% month-on-month in December after a 0.5% rise in November. Compared to the same month a year ago, retail sales are expected to grow 7.5% in December following a 6.6% increase in November.

Including auto-fuel, retail sales are forecast to fall 0.1% month-on-month but gain 7.2% year-on-year in December after November’s 0.2% monthly rise and 5.9% annualised increase.

Retail sales are a key indicator of consumer spending, a major contributor to economic growth.

Earlier in January, the Centre for Economics and Business Research (Cebr) warned that rising inflation is set to dent real wages and consumer spending. It expects inflation will jump to 2.7% over the course of 2017 as a result of a weaker pound pushing import costs higher. The pound has plunged in value since the UK voted to leave the European Union last June.

The ONS on Tuesday said UK inflation surged 1.6% year-on-year in December from 1.2% in November, more than the 1.4% expected by analysts. The Bank of England has said there are "limits" to which it will tolerate inflation rising above its 2% target.

As inflation is set to hurt consumer spending, Cebr predicts UK GDP growth of 0.8% in 2017, which would mark the lowest level since 2009 during the financial crisis.

Elsewhere, China fourth quarter gross domestic product figures are due with analysts expecting an annual rate of growth of 6.7%, unchanged from the previous quarter. China retail sales and industrial production data will also be in focus.

On the company front, Close Brothers releases a first half trading update. Numis said it expects the merchant banking group to report that credit quality remained “excellent” through the period, with good volume growth and stable margins.

The broker believes the Winterflood market maker business has “continued to trade well” compared to the same period last year and we expects the income per bargain to improve.

“Net flows are expected to have remained modest within the Asset Management business but assets under management will have been assisted by the positive mark to market,” Numis said.

“Overall we are confident with our forecasts and expect the second half of the year to be good for investors as well.”

Friday 20 January

INTERIM DIVIDEND PAYMENT DATE
Charles Stanley Group, Greene King, Halfords Group, Octopus AIM VCT, Sirius Real Estate Ltd., Solid State, United Carpets Group, Vertu Motors

QUARTERLY PAYMENT DATE
Real Estate Investors

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Producer Price Index (GER) (07:00)

EGMS
PJSC Megafon GDR (Reg S)

AGMS
Avacta Group, Character Group, Redefine International

TRADING ANNOUNCEMENTS
Close Brothers Group, Record

UK ECONOMIC ANNOUNCEMENTS
Retail Sales (09:30)

FINAL DIVIDEND PAYMENT DATE
Cambria Automobiles, Scottish Oriental Smaller Companies Trust