UK: Slower sales and softer PMIs – TD Securities

TD Securities’ Global Strategy Team expects UK Retail Sales growth to slow sharply in January and anticipates some loss of momentum in both Manufacturing and Services PMIs. While consumers are seen as resilient and PMIs remain in expansion territory, the underlying trend is viewed as more moderate, with UK growth in 2026 described as cautious rather than robust.

Retail resilience but moderating momentum

"We expect retail sales growth to slow to 0.1% m/m (mkt: 0.2%; prior: 0.4%) in January. Though we expect the consumer to show resilience in spending throughout the year, we see the underlying trend to be more moderate than what last month showed."

"Furthermore, giving December's idiosyncratic nature of jewellery buying, we don't expect this strength to fully carry through to the January report."

"We expect UK PMIs to relinquish some of the recent momentum in both the Manufacturing and Services sectors, but continue being expansive at 51.5 (mkt: 51.5) and 53.5 (mkt: 53.5), respectively."

"With sentiment and orders picking up once budget uncertainty was resolved, we believe that three months out from the event, this narrative will now moderate."

"Though the UK should see glimmers of expansion throughout 2026, it will continue at a cautious pace."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)