By Daniel Hunter

The latest figures to come out of the retail sector provide further evidence that the consumer economy improved in quarter three.

The Retail Traffic Index (RTI), compiled by Ipsos Retail Performance, reveals that the number of shoppers to non-food stores rose by +8.5% quarter-on-quarter, significantly better than the five-year seasonal average rise of +5.8%. The gap against footfall levels in 2012 also continued to close.

The number of shoppers over the quarter was 5.0% down year-on-year, an improvement on the comparisons in both Quarter Two and One, when they stood at -6.1% and -5.3% respectively.

The strength of the quarter would have been stronger still if September’s figures had been better. Last month the RTI was weaker than it had been over the previous few. Retail footfall fell by 6.8% on August and by 6.1% compared to September last year.

“Despite the stumble in September, the trend over Quarter Three indicates that the retail sector is on the mend,” comments Dr Tim Denison, Director of Retail Intelligence at Ipsos Retail Performance.

“People’s appetite for shopping is returning as their confidence grows and the economy gradually improves. The strengthening housing market, the rising number of mortgage approvals and the Government’s Help to Buy scheme all generate an impetus that is particularly welcome news to home-owning consumers and DIY/homeware retailers alike.

"It’s likely to be a fillip to retail footfall and a trigger for consumer spending in the months to come, given that it is estimated by the Ernst & Young Item Club that one million people will move house this year.

“The retail recovery will inevitably be a slow one if it is to be sustainable. The crucial next stage for shoppers will be to see a return to growth in real earnings and disposable income levels. Until then we can expect to see some stutters in the monthly indicators, as we have seen in September’s footfall.

"We are half way there: inflation is falling and under better control. However, wage rises are still subdued and remain lower than inflation. Future upward movement will be reliant on recovery in business investment fuelling employment growth and pay awards. When we start to see this happening we can be more confident that the next stage of the retail recovery is just around the corner.”

The figures compiled by Ipsos Retail Performance show that the quiet bank holiday week got September off to a slow start, with many people electing to savour the final rays of a fine summer instead. The middle of the month was much as forecast, but the last fortnight failed to approach the heights of last year, when autumnal weather hit the nation and encouraged seasonal sales. Even noteable product launches such as the i-Phone 5S and the Grand Theft Auto Five game failed to lift overall footfall levels sufficiently to match last year’s levels, when year-on-year growth occurred for the first time in 2012.

Across the regions, there was less of a North/South divide in September than in recent months. The largest changes against August’s footfall came in South West England & Wales, as well as London & The South East, reflecting the importance of the end of the holiday season and back-to-school campaigns. Whilst footfall in Northern England and The Midlands remained at the bottom of the league table, the gap against the same month of 2012 narrowed.

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