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UK Consumer Spending Index September 2019: Consumer spending declines at quickest rate since October 2012
Visa’s UK Consumer Spending Index, compiled by IHS Markit, showed that household spending continued to decline during September. The rate of contraction quickened from -1.2% year-on-year in August to -2.3% at the end of the third quarter, to signal the steepest drop in expenditure since October 2012. The latest reduction extended the current downward trend to 12 months.
Spending also fell on a quarterly basis (-0.3%), but rose slightly when compared to the previous month (+0.2%). Channel data showed the reduction in expenditure was broad-based, with declines seen in both Face-to-Face and eCommerce categories. Face-to-Face recorded the quickest drop in spend since April 2018 (-4.5% on the year). Meanwhile, expenditure via eCommerce channels fell at a similar pace to that seen in August (-0.6%).
Adolfo Laurenti, European Principal Economist, Visa, commented:
“Consumer spending suffered another setback in September as the decline in spend accelerated to -2.3% year-on-year, after slipping -1.2% in August. The weakness appears to be broad based, impacting both Face-to-Face (-4.5%) and eCommerce (-0.6%). This is the second consecutive month in which we report a drop in eCommerce."
“Weakness was consistent across the spending categories, with declines in six of the eight categories we track. Hotels, Restaurants and Bars, and Recreation & Culture were the only categories to buck the downward trend last month. It appears that retail ended the summer on a subdued tone, despite some still favourable readings on employment and wages. The British consumer has yet to gain a stronger footing in terms of confidence, although hopes remain in place for a turnaround in the Autumn.”
Annabel Fiddes, Principal Economist at IHS Markit, said:
“The latest Visa CSI data showed that UK consumer spending continued to decline in September, to round off the worst quarterly performance since 2012. Heightened uncertainty regarding the path to Brexit and concerns over the resilience of the economy have likely been the main factors dampening household confidence and expenditure, and there are no clear signs that this will improve any time soon.
“The high street remained a key source of weakness, which saw spend fall 4.5% on an annual basis in September, as expenditure fell at a notably softer rate through eCommerce (-0.6%).”
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