Visa’s UK Consumer Spending Index, compiled by IHS Markit, signalled a further year-on-year decline in consumer spending in March. That said, the rate of reduction softened from -1.8% in February to just -0.2%, which was the weakest decrease seen since the current sequence of deterioration began last October.
Channel data indicated that the reduction was led by a further fall in spend through Face-to-Face channels, as expenditure through eCommerce rose for the first time this year. On an annual basis, spending fell -0.7% year-on-year on the high street, while eCommerce channels registered a +0.5% increase compared to the same month a year ago.
Adolfo Laurenti, European Principal Economist, Visa, commented:
“Visa’s latest UK CSI shows some signs of stabilisation, as consumer spending declined in March by -0.2%, after slipping by -1.8% in February. In particular, Face-to-Face spending showed less strain than it did in February, declining by -0.7% in March compared to -2.6% the previous month. In another encouraging development, eCommerce registered an increase for the first time this year (+0.5% year-on-year).
“At sector level, Food, Beverages & Tobacco experienced weakness in spend in March 2019 compared to a year ago, whilst spending in Hotels, Restaurants & Bars continued to buck the trend with a sustained uplift in spend at +5.3% year-on-year. While the picture remains far from reassuring, the latest reading contributes to some expectations that the negative trend may have run its course and some spring thawing may follow in the coming months, in line with macroeconomic fundamentals — such as unemployment rate and wage growth — that remain favourable.”
Annabel Fiddes, Principal Economist at IHS Markit, said:
“The latest Visa CSI data indicated that household spending fell further at the end of the first quarter, though the rate of reduction eased noticeably during March, declining just -0.2% on the year. Nonetheless, expenditure has now fallen on an annual basis for the past six months, as heightened political and economic uncertainty continues to weigh on consumer confidence and spending decisions.
“Taking a look at the breakdowns, weakness largely emanated from the High Street, which has seen spend fall throughout 2019 to date. On a brighter note, eCommerce expenditure rose slightly for the first time since December.
“Combined with other timely economic indicators, such as the PMI surveys, the CSI data point to a relatively sluggish UK economic performance through Q1. Furthermore, IHS Markit anticipate real GDP to expand by just 0.8% in 2019, down from 1.4% in 2018.”
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