Recovery signs appear for the retail sector

UK GDP grew by 3.6% in the three months to May, according to the Office for National Statistics. The growth is attributed to strong retail sales over the three months, increased levels of school attendance and the reopening of the retail, leisure and hospitality sectors.

Lockdown restrictions helped UK retail sales climb 12.2% in the three-months-to-June data. Much of this growth is attributed to an April bounce when lockdown restrictions were eased for non-essential retail. Sales from high street and shopping centre retailers all declined in the period, while online sales remained above pre-pandemic levels.

Overall, retail sales growth has already started to slow, which might indicate the recovery is weakening.

Several indirect proxies for the performance of the sectors are worth noting. First, rent collection rates, as the ability to pay rent reflects rising revenues – encouragingly, leisure operators posted the highest increase in rent paid to landlords in June, according to Colliers’ data, albeit from a low base. The café sector, health and fitness and restaurants all improved.

Second, the hiring rate within the indoor leisure and hospitality sectors surged in May, according to data from job search engine Adzuna. Online job adverts are also back above pre-pandemic levels. Third, more than half a million people came off the furlough scheme in June, according to government data, which is also attributed to the reopening of the leisure and hospitality sectors.

But the pandemic is far from over, and recovery in the UK economy itself remains fragile. After a spike in the infection rate in mid-June, new cases have fallen dramatically – by 37% in the seven days to 29 July.

However, the testing rate is also in decline. The retail, leisure and hospitality sectors can but hope that the tide is finally turning in their favour.

Addi Spiers is real estate partner at Addleshaw Goddard