CONSUMER SPENDING BOUNCES BACK AFTER SOFT PATCH IN BREXIT VOTE RUN UP SAYS STUDY
Households’ spending showed “renewed signs of life” in September after hitting a soft patch during the run-up to the Brexit vote, a report has found.
Spending by consumers increased by 2.4% year-on-year in September as people splashed out on meals and trips out to enjoy the last of the summer sun – while economic concerns “took something of a back seat” – according to Visa.
This followed a small 0.1% annual rise in consumer spending recorded in August, which had marked the weakest growth seen in nearly three years.
Visa UK’s Consumer Spending Index said September’s bounce back in spending “signals that expenditure growth is seeing tentative signs of recovery”.
The 2.4% annual growth rate in spending was the highest seen in the past five months.
Online spending in particular was driving the growth seen in September, with growth in spending “face-to-face” on the high street remaining broadly flat, the report said.
E-commerce spending increased by 6% annually in September, while spending on the high street edged up by just 0.1%.
The index, compiled by IHS Markit, reflects overall consumer spending, not just that on cards.
It found spending on recreation and culture was up by 6.8% year-on-year in September, while spending in hotels, restaurants and bars increased by 6%.
Food-related spending increased by 2.3% annually, while clothing and footwear spending fell back by 1.3%.
Kevin Jenkins, UK and Ireland managing director at Visa, said: “Economic concerns took something of a back seat in September, with consumers reverting to more traditional spending patterns as they took advantage of the last of the summer sun.”
He continued: “Growth was once again driven by the experience economy, as people spent more on meals out, family holidays and trips to the theatre.
“On the other hand, clothing and footwear suffered another fall in sales, with little evidence of the back-to-school ranges providing any significant boost.”
Mr Jenkins said it is too early to say whether the growth seen in September will continue.
Annabel Fiddes, an economist at IHS Markit said: “Household expenditure growth saw renewed signs of life in September, following a soft patch that has been evident since May in the lead up to the Brexit vote.”
But she said that as consumer confidence is still down compared with earlier in the year, spending “may set itself on a lower overall growth trajectory given that a lot of uncertainty remains over the UK economic outlook”.