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UK Consumer Spending Index December 2019: Overall consumer spending falls despite strong eCommerce performance
Visa’s UK Consumer Spending Index, compiled by IHS Markit, pointed to a softer fall in household expenditure at the end of 2019. Overall, consumer spending declined -1.2% on an annual basis in December, following a -2.0% reduction in November.
Compared to the previous month, expenditure fell -1.9% at the end of the year, after a +1.5% increase in November. The three-month-on-three-month measure meanwhile continued to signal a mild improvement in underlying expenditure trends, and posted a +0.5% increase.
ECommerce categories saw a marked pick up in spend in December, with expenditure rising at the quickest rate since August 2017 (+3.8% on the year). This was likely helped by the timing of Cyber Monday, which occurred in December in 2019 as opposed to November. However, spending continued to decline across Face-to-Face categories (-3.4%).
Adolfo Laurenti, European Principal Economist, Visa, commented:
"Last year’s late Cyber Monday delivered the one bright spot for UK consumer spending in December, as ecommerce rebounded by 3.8 percent over the prior year, following a rather disappointing reading in November. Yet the rise in online shopping was insufficient to lift overall spending, which slipped by 1.2 percent for the year, dragged down by persistent headwinds in face-to-face retail.
"Food & Beverages, Household Goods, and Health & Education were the sectors which struggled the most, with all three losing more than 3% against December 2018. The index validates concerns about a poor performance of the British economy in the fourth quarter, in line with ONS data and industry reports. Nevertheless, and at the risk of sounding an optimistic note, the pace of deterioration has abated and signs of stabilisation are emerging; on a quarterly basis sales rose by 0.5 percent. We will take the silver lining as cautiously promising as we head into 2020."
Annabel Fiddes, Principal Economist at IHS Markit, said:
"Household expenditure trends remained subdued at the end of 2019, with the Visa CSI showing a further drop in spend in December. However, the -1.2% year-on-year reduction was softer than the -2.0% decline seen in November, helped in part by a surge in eCommerce spend. The latter was likely boosted by the later timing of Cyber Monday in 2019, which supported a +3.8% annual increase in online sales,; the quickest rate of growth in this category since the summer of 2017. However, the high street continued to dampen the headline figure, with Face-to-Face expenditure down -3.4% compared to a year ago.
"The subdued spending picture coincides with relatively lacklustre economic growth, as highlighted by recent ONS and IHS Markit PMI data, as uncertainty weighed heavily on businesses and households. December’s decisive election result adds to hopes that confidence will recover, however, which in turn could support a recovery in business activity and consumer spending."
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