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Visa’s UK Consumer Spending Index, compiled by IHS Markit, pointed to a further marginal decline in overall household spending at the start of the second quarter. Expenditure fell -0.5% on an annual basis during April, which was slightly quicker than the -0.2% reduction seen in March. Consumer spending has now fallen in each of the past seven months.
Spending split by channel pointed to a fractional increase in Face-to-Face expenditure (+0.1% year-on-year), which marked the first increase since last September. In contrast, spending via eCommerce fell slightly during April, down -0.4% compared to a year ago.
Adolfo Laurenti, European Principal Economist, Visa, said “Consumer spending remained tentative in April, but we noticed some encouraging green shoots: an improvement in face-to-face transactions, a weakening in macroeconomic headwinds, and some robust gains in several sectors and categories, such as Food & Drink (+4.7 percent increase in spend compared to April 2018), Hotels, Restaurants & Bars (+3.7 percent) and Household Goods (+2.7 percent). While the economy continues to face some challenges in the near term, it appears the consumer is selectively re-engaging, buoyed by gains in real wages and the positive developments in the job market.”
Annabel Fiddes, Principal Economist at IHS Markit, said “Consumer spending trends remained relatively subdued in April, according to latest Visa CSI data, amid an increasingly murky political and economic outlook for the UK. Overall, expenditure declined by -0.5% compared to a year ago, which marked the seventh month in a row that spend has fallen. However, the softer reductions in March and April compared to the start of 2019 provide some hope that spending could stabilise soon.”
“Nonetheless, an uncertain outlook has weighed heavily on consumer sentiment in recent months, which remained close to a six-year low in April. At the same time, the IHS Markit PMI surveys show that the economy is struggling to expand as firms face a combination of heightened uncertainty and signs of weaker growth across global markets.”
