British retail sales fell at the fastest pace in almost a year, house prices continued to drop and firms expect to hire only a small number of extra staff, data showed on Tuesday, implying a slow and tentative recovery. The downbeat message from the three surveys chimed with Bank of England Governor Mervyn King's warning last week that Britain can expect a choppy return to health after a shock contraction late last year.
There was no reaction to the data on financial markets, which are not pricing in any rise in borrowing costs until later this year. Economists said the figures, which came on the heels of a soft survey of service sector activity last week, injected an element of doubt into how soon rates would start going up. "We had been gravitating towards a hike, in terms of the voting pattern and rhetoric of the MPC, but the data have nudged that back a bit on balance," said Ross Walker, economist at RBS.
The risks were highlighted by February's weak retail sales figures from the British Retail Consortium, which fell at their fastest annual pace in 10 months. The trade body said like-for-like retail sales were 0.4 percent lower in February compared to a year ago, after a 2.3 percent rise in January. It blamed the fall on declining household incomes and fears about the economic outlook at a time of public spending cuts and tax rises. The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance rose to -26 from -31, reflecting a 26 percentage point gap between the proportion of surveyors reporting price falls over the past three months.
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