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UK Retail Sales Grow Unexpectedly On Online Spending

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UK retail sales grew unexpectedly in July, underpinned by online sales, signaling that consumer spending is set to support economic growth in the third quarter.

Retail sales volume grew 0.2 percent in July from June, when sales advanced 0.9 percent, the Office for National Statistics reported Thursday. Sales were forecast to drop 0.2 percent after recovering in June.

Likewise, excluding auto fuel, sales gained 0.2 percent versus a 0.8 percent increase in June. This was also in contrast to the expected fall of 0.2 percent.

Food store sales remained flat, while non-food store sales declined 1.4 percent. Meanwhile, non-store retailing grew 6.9 percent.

On a yearly basis, growth in the retail sales volume slowed to 3.3 percent in July from 3.8 percent in June. Economists had forecast a 2.5 percent increase.

Excluding auto fuel sales, retail sales increased 2.9 percent after rising 3.6 percent in June. The pace of growth exceeded the expected 2.3 percent.

Online retailing that accounted for 19.9 percent of total retailing, logged an overall growth of 12.7 percent when compared with the same month a year earlier.

July's figures leave us a little more confident that the economy avoided another contraction in the third quarter, Gabriella Dickens, an economist at Capital Economics, said.

The economist estimated that even if sales fail to rise in August and September, retail sales would still rise by 0.7 percent sequentially in the third quarter as a whole, the same as in the second quarter.

ONS data showed that retail sales grew 0.5 percent in the three months to July from the previous three months and advanced 3.2 percent from the same period last year.

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