Panic buying and sunshine fuel bright spring retail figures

Panic? What panic? The fuel strike that hasn't happened (yet) has had a dramatic impact on our behaviour pushing up retail sales in March to the highest levels in a year. Fuel sales themselves reaching record levels for March as motorists queued to fill up their tanks, jerrycans and any old bottle with a top they could lay their hands on.

Retail sales rose 1.8% in March; economists polled by Reuters were expecting less than a quarter of that at 0.4%. Fuel alone rose 4.9% but the sunny weather in March (a dim and distant memory, I concede) pushed clothing and footwear sales higher, too. Perhaps the motorists needed t-shirts and sandals as they heated up in the long lines outside petrol stations. Temporary effects aside there is some evidence of underlying growth in the sector.

This is interesting because I think it makes predicting next week's assessment of the whole economy's performance very hard to predict.

The quarterly GDP figures are out on Wednesday and many economists have been warning they could be dragged down by some surprisingly weak statistics from the construction industry.

If the figures show the economy actually shrank in the first three months of the year it would be the second quarter in a row of contraction ... which is the technical definition of the dreaded 'R' word: recession.

Today's positive retail news will go some way to prevent that but will it be enough?

Some people, including hints from the Bank of England, are casting doubt on the accuracy of the construction industry stats which don't seem to reflect generally positive comments from construction companies in recent months.

But whether or not we are reporting a recession next week the more important question is about the direction the country's economy is going. Are we on a gradual but fragile recovery or has there been six months of stagnation? With inflation stubbornly high and relentlessly eating in to household spending power a return to growth - and the higher wages which normally follow - would be very welcome. And for the 2.6 million people without work only economic growth will lead to substantial new jobs being created.