UK Consumer Spending Index May 2019: Consumer spending falls modestly in May

Visa’s UK Consumer Spending Index, compiled by IHS Markit, signalled that overall expenditure fell modestly in May, down -1.4% on an annual basis. This was quicker than the -0.6% reduction seen in April, and extended the current sequence of declining expenditure to eight months.

Channel data indicated the fall was predominantly driven by lower Face-to-Face expenditure. After broadly stabilising in April, spending through this channel fell -3.6% compared to a year ago. In contrast, eCommerce expenditure rose slightly (+0.7%), which helped to offset a reduction in April (-0.5%).

Adolfo Laurenti, European Principal Economist, Visa, commented:

“Consumer spending slipped further in May, mostly reflecting weak in-shop, face-to-face transactions. While a few temporary factors may have played a role, including the disappointing spring weather this year compared with May 2018, our figures corroborate anecdotal reports of poor sales on high streets and a cautious attitude amongst consumers. Positive growth in ecommerce did not offset the negative trend, but does reflect the shifting patterns of spending – and serves as a reminder that underlying macroeconomic conditions remain quite favourable, despite the downbeat sentiment. Spending at hotels, restaurants, and bars was quite resilient; the largest year-on-year declines were reported for clothing and footwear, where we suspect a weather-related effect, as well as for transport and communication.”

Annabel Fiddes, Principal Economist at IHS Markit, said:

“Consumer spending trends remained lacklustre in May, with overall expenditure falling by -1.4% year-on-year according to the latest Visa CSI data. This weakness has coincided with a slowdown in the UK economy and subdued confidence, as highlighted by recent survey data compiled by IHS Markit. Furthermore, UK PMI data indicated that the economy remained broadly stagnant in May, as Brexit-related uncertainty continued to dampen spending decisions and overall demand. Combined with signs of softer global economic growth, the UK economy faces increasing headwinds in the months ahead, which is likely to weigh on economic performance and spending going forward.”

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