Retail Sales get a Kickstart

The CSO have just published the Retail Sales Index for February.  The headline figure is very positive.

The volume of retail sales increased by 3.0% in February 2010 compared to February 2009 and there was a monthly increase of 14.9%. This increase in the volume of retail sales is the first recorded year on year growth in retail sales since January 2008.

This is good news.  Here is the recent pattern of the All Businesses Index by value and volume.  All the series used here are seasonally adjusted. Click graph to enlarge.

Here are the related annual and monthly changes.

We can see that the annual change in the Retail Volume Index is positive for the first time since January 2008.  Sales by value continue to show a smaller improvement as the total value is dragged down by falling prices.
Looking at the monthly changes we can see there is a dramatic turnaround, following a big fall in January.  Looking back 12 months we can see that this mirrors the pattern seen in January and February last year.  The detail of the monthly changes in the All Businesses Index is largely lost because the of length of the vertical axis needed to include these large swings seen in the January and February figures.
In the early parts of the year the Retail Sales Index is heavily weighted to motor sales as they make up a large proportion of sales.  The recovery of the All Business Index in February is largely driven by the recovery in car sales.
If we look at the Value and Volume indices excluding Motor Trades we see that the volatility present in the first graph above is now absent, but so too is the big upswing for February, though there still is a small increase by Volume in February.

The equivalent annual and monthly changes are shown here

Excluding Motor Sales we can see that Retail Sales are still below where they were last year but that the annual drops are beginning to unwind, particular by volume. 
The interesting feature of the monthly changes is the strong divergence of the Value and Volume indices in February.  For most of the period shown (bar October 2009) we can see that the monthly changes in the two series have a strong positive correlation.  However in February the monthly changes moved in opposite directions. 
When compared with January the monthly change by value fell from +1.3% to +0.1%, while the monthly volume figure increased from +0.4% to +1.3%.  What is important is that all the monthly changes seen in 2010 in these series have been positive.  We are buying more stuff but at lower prices.