Friday, March 21, 2014

Zero Sum Recovery

A lot of business people I've been speaking to recently have all been asking the same thing: "where's the recovery?" We've all seen the pick up in the consumer confidence indices - but very few are seeing it in their sales data. The January retail indices from the CSO were telling: four of the thirteen sub-categories showed a decline in the value and/or volume of sales year-on-year (seasonally adjusted). Worse: twelve categories showed the value of sales rising by less than the volume - implying deflation.

It feels like a 'zero sum recovery' - with gains for one operator, company or sector coming at the expense of others. My guess is that February's numbers (due out at the end of next week) will show a year-on-year decline in retail sales (excluding motors) for volumes and probably for values , which everyone will blame on the bad weather. Fair enough. But if the indices for March due out at the end of April show a further decline then we'll know that the zero sum recovery has become a 'negative sum recovery'. Which means there isn't one...

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