Amid growing hopes that a sustained economic recovery is now in sight, the Scottish Retail Consortium’s latest figures reveal that growth in sales in Scottish stores in the key holiday month was at its highest for two-and-a-half years.
The group cited the best summer weather for years and Andy Murray’s Wimbledon victory as explanations, saying shoppers had gone out to buy millions of pounds extra of food, drink, summer clothes and outdoor furniture.
With the Scottish economy still to get back to the heights it reached before the financial crisis, retailers said it remained too early to say whether the boom was a sign of things to come.
But, five years on from the credit crunch, retailers and economists say the key figures are finally “looking up”. It comes after the Bank of England revised its growth forecast for next year to 2.5 per cent, up from 1.7 per cent amid a broad range of indicators suggesting the economy is slowly bouncing back.
In detail, total sales in July were 4 per cent higher than 12 months ago. Sales of food were up by 5.6 per cent, with the growth in all products outstripping the UK for the first time since March 2011. The driest and warmest summer for years helped the push, with barbecue food and ice-cream among the best-sellers, especially in tourist coastal areas.
Strong sales of clothes in June carried on into July, with summer clothes again in high demand, although indoor furniture sales suffered thanks to the weather. SRC director Fiona Moriarty said: “A double whammy of feel-good factors pushed Scottish sales growth into record-breaking territory in July.
“Sunshine and sporting successes boosted the public mood and willingness to spend further after a promising pick-up in June. This helped to deliver an excellent showing, which tops the UK total for the first time since March 2011.”
She said: “It’s too early to tell whether what we’re seeing is a welcome but short-lived uplift or the beginnings of a longer-lasting economic recovery. But this run of good growth, bringing the three month average to 2.5 per cent, means things are certainly looking up.
“Summer food, seasonal fashions and outdoor living products were stand-out performers in what was an impressive month. In the second warmest July on record, demand for picnic and barbecue fare drove a strong performance for food, while non-food leapt up to its best result since December 2009.
“By way of contrast, it was a disappointing month for furniture and other homewares as appetite for ‘indoor living’ was diminished and many people prioritised putting their money towards updating their summer wardrobes.”
David McCorquodale, head of retail at KPMG, which sponsors the survey, added: “Andy Murray’s Wimbledon victory started the rally, with celebration parties driving food and drink sales early in the month. A prolonged spell of summer weather then boosted sales of barbecues, burgers and beer.
“Those with most to smile about were the fashion retailers who, following an extended cold spring, finally got reward from consumers who had confidence in the weather to buy summer clothing.
“Some may have already started discounting and others were beginning to launch autumn collections but, undoubtedly, most made the most of the summer sunshine to clear their summer collections.”
Alongside the news from the high street and the housing market figures, the UK Purchasing Managers’ Index for the country’s service sector surged to its highest reading since 2006 in July. That helped to boost exports as well, with the UK’s overall trade deficit falling to £1.5 billion, down from £2.6bn in May. However, how much of the good high street news is a summer “blip” is not yet clear. Other surveys have shown that consumer confidence actually fell from -23 in June to -25 in July.
Jo Armstrong, of the Centre for Public Policy for Regions at Glasgow University, said: “It signals a slow but steady fallout from the recession, with more of an uptick expected next year. There’s always the threat of another major euro crisis there, but things are gradually getting better, albeit slowly.”
Finance secretary John Swinney said: “The Scottish Government is taking action where we can – and we are seeing results – but there is so much more that we could be doing with the full economic and fiscal powers of independence to strengthen our economy and create jobs.”
The most recent Fraser of Allander Institute survey, one of the most authoritative guides on the Scottish economy, has also predicted a slow return to growth, estimating it at 1.6 per cent next year and 2.1 per cent in 2015.