Visa’s UK Consumer Spending Index, compiled by IHS Markit, rounded off a disappointing second quarter, with expenditure down -1.4% in June compared to a year ago. The rate of reduction was unchanged from May, to mark the joint-second steepest drop in spend since April 2018. The latest data rounds off the weakest first half of a year for consumer spending since 2012, with expenditure down -1.1% over the first six months compared to the same period in 2018.
The reduction in total expenditure was broad-based across both Face-to-Face and eCommerce channels in June. On an annual basis, spending fell -2.1% in Face-to-Face categories. Meanwhile a -0.8% reduction in eCommerce spend offset a marginal increase in this channel during May.
Adolfo Laurenti, European Principal Economist, Visa, commented:
“The latest Visa UK CSI shows consumption at a standstill in June, with overall spending unchanged over May. Compared with one year ago, spending slipped -1.4% with Face-to-Face transactions suffering the brunt of the adjustment but eCommerce showing softness as well. Within the spending categories, only Hotels, Restaurants & Bars posted solid gains (+3.9% year-on-year).
“The remaining categories reflected persistent caution within the UK consumer, with Transport & Communication and Household Goods under particular pressure. A rainy and rather disappointing start of the summer may have played a role to hold back some of the more seasonal categories. Now the eyes turn to July: the combination of more seasonable weather and some further acceleration in wages and salaries should contribute to a much anticipated turnaround in sales,notwithstanding persisting uncertainty about the global business cycle.”
Annabel Fiddes, Principal Economist at IHS Markit, said:
“The latest Visa CSI data indicated that household spending remains fragile in the UK, with expenditure continuing to fall modestly in June. The latest set of data rounds off the weakest start to a year since 2012. This adds to evidence that heightened uncertainty towards the outlook is dampening confidence and activity across the UK, as highlighted by the recent IHS Markit PMI surveys.
“The prospect of a slowing economy and reduced confidence does not bode well for expenditure trends going forward. With no clear plan for the UK’s exit from the EU and signs of a weakening global economy, it is likely that economic conditions will remain challenging in the months ahead.”
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