UK retail sales flatter to deceive thanks to Black Friday effect

UK retail sales increased much more than expected last month due to a statistical anomaly caused by Black Friday.

Sales volumes rallied 1.1% month-to-month in November, the Office for National Statistics revealed, which was much higher than the consensus 0.4% forecast.

The year-on-year growth rate increased to 1.6%, with the previous month's growth revised to flat from the 0.3% fall originally estimated. The consensus was for a 0.3% rise on the year.

Excluding petrol, sales were up 1.2% on the month, versus a 0.4% consensus and a revised 0.4% from the prior month. On last year, volumes ex-fuel were up 1.5% versus the 0.2% consensus estimate.

ONS admitted that its seasonal adjustment may not fully account for a longer Black Friday sales period, with this set of data covering the period up to 25 November, while Cyber Monday sales from 27 November will be included in the next set of figures.

With three of the last four November retail sales prints from the ONS have risen in excess of 1% and from 2014 to 2016 the level of seasonally adjusted sales in the month have been above the 12-month average, the statistical authority was felt to be struggling to adjust to the effects of the new seasonal sales regime.

"The surge in retail sales in November does not signal broader consumer strength. The official data are failing to fully adjust for the new seasonal pattern generated by Black Friday, which only gained traction in the UK three years ago," said economists at Pantheon Macroeconomics.

November's seeming strength has merely been a reflection of consumer bringing forward purchases they otherwise would have made in December or January to November, due to the discounts available on Black Friday, Pantheon said.

"It won’t be possible to draw strong conclusions about the health of consumer spending over the festive period until January’s data are published in two months’ time."