Mixed messages about high street demand (Apr 08)

The fairly robust picture given by the official retail sales data continues to contrast with the weaker tone of just about every other indicator of the strength of high street demand. What’s more, there are growing signs of weakness off the high street too. So while we take some comfort from the official sales data that consumer spending is not collapsing, we doubt that the official figures will hold up this well for much longer. After all, the gloomier tone of the anecdotal and survey evidence sits much more comfortably with the plummeting level of consumer confidence, falls in house prices and the squeeze on real incomes. We continue to expect real consumer spending growth to slow to around 1.5% this year and to weaken further next year as the full impact of the housing slowdown is felt.