Adolfo Laurenti
European Principal Economist, Visa
"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."
About Visa’s UK Consumer Spending Index
Visa’s UK Consumer Spending Index uses card transaction data to provide a robust indicator of total consumer expenditure across all payment methods and is used by a range of stakeholders to gain insights into consumer spending, including HM Treasury.
It is based on spending on all Visa debit, credit and prepaid cards which are used to make an average of over 2.3 billion transactions every quarter and account for £1 in £3 of all UK spending. Working with IHS Markit, these card spending data figures are adjusted for a variety of factors such as card issuance, changing consumer preferences to pay by card rather than cash and inflation.
These adjustments mean that these data are distinct from Visa’s business performance and the Index reflects overall consumer spending, not just that on cards.
Headline Findings (From - Until)
Household spending drops -1.2% on the year, after -2.0% decline in November
Solid rise in eCommerce spend (+3.8%) is offset by further decline across Face-to-Face categories (-3.4%)
Hotels, Restaurants & Bars remains top performing sector (spend up +3.8%)
Spending % Annual Change (From - Until)
Consumer spending rose through both eCommerce and Face-to-Face categories for the second successive month in June.
Compared to one year ago, Face-to-Face expenditure increased by +1.1%. Although this was slower than the +1.5% expansion seen in May, it marked the first back-to-back monthly rise in this category since early 2016.
Meanwhile, eCommerce spend rose +0.4% year-on-year during June. However, this was slower than the +0.8% increase seen in May, and less marked than the historical trend since the series began in mid 2009.
Apr'18
May'18
Jun'18
-5.4
+1.5
+1.1
-0.1
+0.8
+0.4
History (2018)
Clothing & Footwear
+7.2%
Health & Education
-4.2%
Annual Growth Rates by Sector
Spending by Sector
Visa's UK Consumer Spending Index monitors eight broad sectors. Summary data for annual growth rates in April, May and June, which are not adjusted for seasonality and trading days, are provided in the table opposite.
Just over half of the eight broad spending categories registered higher expenditure compared to a year ago in June. The strongest increase in spend was seen across the Hotels, Restaurants & Bars sector, where growth reached an 11-month high.
Household Goods also saw a solid upturn in spending, while expenditure continued to rise in Clothing & Footwear categories (albeit only slightly).
The Recreation & Culture sector noted the quickest drop in spend of all eight categories in June, though the pace of decline was the softest seen in 2018 so far. Transport & Communication and Misc. Goods & Services both saw only marginal falls in spending volumes.