Apr 13, 2010
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Retail sales jump, housing market cools

Apr 13, 2010

By Christina Fincher and David Milliken

LONDON (Reuters) - The housing market cooled last month but consumers splashed out for Easter and exports rebounded after snow-related disruption at the start of the year, a raft of data showed on Tuesday 13 April.

The health of the economy has become the key political battleground ahead of a May 6 election that is shaping up to be the least predictable contest since 1992, with the opposition Conservatives only narrowly ahead in opinion polls.

Britain pulled out of recession at the end of 2009, but a looming public spending squeeze to tackle a record budget deficit has raised doubts over how buoyant the recovery will be.

Data from the Office for National Statistics showed exports surged 9.5 percent in February, the biggest monthly increase in more than seven years, helping narrow the goods trade gap to 6.2 billion pounds from January's 17-month high of just above 8 billion pounds.

The figures boosted hopes that trade will have made a positive contribution to growth in the first quarter of this year, though analysts warned that distortions due to the weather meant the pace of improvement was unlikely to be sustained.

"Trade was a significant drag on growth in the Q4, but it looks like it's on course to make a positive contribution in Q1," said Ross Walker, economist at RBS. There's some underlying improvement but ... net trade is not going to plug the gap in household and government consumption."

Britain's economy grew by 0.4 percent in the fourth quarter of 2009 after an 18-month recession that wiped out more than 6 percent of output.

First quarter gross domestic product figures, due on April 23, are expected to show the recovery continued into this year and will be a key milestone in the election campaign.


Separate figures from the British Retail Consortium showed retail sales jumped sharply last month on a year ago, but again the figures came with a health warning, this time due to the early timing of Easter.

The BRC said the value of sales last month was 4.4 percent higher than a year ago when measured on a like-for-like basis, the biggest rise since last April. Total sales, which include new floorspace, rose by an annual 6.6 percent, the best showing since April 2006.

"These are strong figures but they would have been only half as good without the distorting effect of Easter," said BRC director-general Stephen Robertson.

Two house price surveys offered a less upbeat picture.

The Royal Institution of Chartered Surveyors said its monthly house price balance dropped to +9 in March, its lowest since July 2009, from +18 in February and separate government figures showed house prices fell 0.1 percent in February.

British house prices have recovered by around 10 percent from a five-year low set in the first half of 2009, but the pace of increase has slowed markedly since the start of the year.

The RICS survey showed new instructions to sell properties outpaced new buyer enquiries for a third consecutive month, fuelling a six percent rise in the average stock of property on estate agents' books -- the largest monthly increase in more than two years.

"With the general election approaching and uncertainty growing over the political direction of the country, many vendors who were previously inclined to sit on the sidelines now appear eager to put their properties on the market," said RICS spokesman Ian Perry.

(Editing by Mike Peacock)

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