- Consumer expenditure up +0.6% year-on-year, first rise since September 2018
- eCommerce sees solid increase in spending (+4.3%)
- Hotels, Restaurants & Bars leads growth in February (+6.0%)
Visa’s UK Consumer Spending Index, compiled by IHS Markit, pointed to a return to growth in expenditure by UK households in February. Spending was up +0.6% year-on-year, following a fall of -1.8% in January and ending a 16-month sequence of declining spend.
On a monthly basis, expenditure rose +1.9%, the strongest monthly expansion since November 2018. On the other hand, the three-month-on-three-month measure showed a further reduction in spending of -0.8%.
Channel data indicated a broad-based rise in spending across both eCommerce and Face-to-Face categories in February. The increase in eCommerce spending was +4.3%, the largest year-on-year improvement since August 2017. Meanwhile, Face-to-Face spending grew by +1.4%, marking the first rise in expenditure for 17 months.
Adolfo Laurenti, European Principal Economist, Visa, commented:
“It is encouraging that the latest spending data showed some positive development in February, as the country prepares to face the challenges of the global coronavirus pandemic. Visa’s Consumer Spending Index rose by 0.6% over February 2019, with most categories reporting solid progress. Ecommerce registered the best performance in two-and-a-half years, and face-to-face spending rose for the first time since autumn 2018. Except for clothing and footwear, all categories posted gains over one year ago, with notable acceleration in Hotels, Restaurants & Bars, as well as in Food, Beverages & Tobacco, and Health & Education. As we noted previously, solid macroeconomic fundamentals were already supportive for an acceleration in spending once uncertainty lifted. Now coronavirus will test the resilience of the UK consumer.”
Annabel Fiddes, Principal Economist at IHS Markit, said:
“The return to growth of consumer spending seen in February was clearly a welcome development, but now is overshadowed by the clouds of uncertainty caused by the unfolding COVID-19 situation. Households are likely to take a step back from discretionary spending, and any restrictions on travel will also hit the experience economy. February may therefore come to be seen as the calm before the storm, with some difficult months ahead.“
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