Monday, February 18, 2019

Consumer spending driving GDP growth


There was strong growth in consumer spending in monthly, (+1 per cent) quarterly (+1.1 per cent) and annual figures (+1.5 per cent) for the first time in six months, according to the Visa UK Expenditure Index.

The Index, which is based on all Visa debit, credit and prepaid card payments, found that face-to-face purchases (+1.3 per cent) outstripped online (+1 per cent).

Year-on-year spending rose by 1.5 per cent, following a slight increase in October of 0.5 per cent.

Jeremy Nicholds, Director of Commercial Development at Visa Europe commented: “Consumer spending in November culminated in one of the strongest periods of growth this year, laying the ground for what retailers hope will be a good December.”

Spending in five of the eight categories monitored also saw growth for the first time since June, providing hope that the Christmas period will be a good one for retailers. Boosted by the colder weather in late November, clothing retailers saw a 5.5 per cent boost in November y-o-y, while spending in hotels and restaurants saw a 8.4 per cent rise.

But overall spending in the food, beverages and tobacco sector fell by 1.8 per cent in November y-o-y.

Paul Smith, Senior Economist at Markit said one of the most encouraging aspects of the report was the “broad-based nature of the upturn.”

“The recent upturn in the housing market is benefiting DIY and household goods stores. Spending associated with recreation & culture also seemed to be high on consumers‘ agenda, with this area seeing noticeable growth over the month.”