Member News
5th December 2012New data from Visa Europe indicates that household spending remains under pressure from widespread job insecurity amid high unemployment and inflation.
November saw a rise in UK consumer spending for a third time in the past four months, although growth was marginal, according to Visa Europe’s UK Expenditure Index, which takes card spending data and adjusts it for a variety of factors to create a like-for-like comparison of consumer spending.
UK consumer spending rose 0.3% in November, following a decline of -3.1% in October. Growth on a 3m/3m basis was maintained at a healthy rate of 1.8% but, compared to a year earlier, spending fell by -1.1%. Although slower than the -2.0% reduction seen in October, it was the second successive month that a fall in spending on this measure has been registered.
Dr Steve Perry, Commercial Director at Visa Europe said:
“Consumer spending was up 0.3% in November compared to October. Spending data in the last three months shows minor, if not spectacular improvements, with spending 1.8% higher than the summer months. However, retailers will have a task on their hands to part shoppers from their money this Christmas. While spending levels improved in November, they were still -1.1% lower than a year ago.
“The final quarter of this year is the first since Q1 to be unaffected by temporary factors such as the Queen’s Jubilee or the Olympics. The November figures therefore indicate a picture of weak growth.”
Hotels & Restaurants saw marked growth, while there were modest increases seen in Clothing & Footwear and Misc. Goods & Services. Modest declines tended to be registered elsewhere, with the exception of Health & Education where a sharp and accelerated reduction was witnessed.
Chris Williamson, Chief Economist at Markit said:
“Consumer spending rose in November, though the meagre 0.3% rise means expenditure continues to run lower than a year ago.
"Household spending remains under pressure from widespread job insecurity amid high unemployment, weak wage growth that continues to be eroded by stubbornly high inflation, as well as a desire to pay off existing debt in the face of an uncertain and gloomy economic outlook.
“The heavy rains seen across large parts of the country no doubt dampened shoppers’ enthusiasm to venture on to the high street, but the weekly data available so far for December suggest that any rebound remains elusive.
"As such, with households accounting for roughly two-thirds of all expenditure in the economy, the Visa data add to the growing likelihood that the UK may have returned to contraction in the final quarter of the year after an all-too-brief growth spurt in the summer.”
Online expenditure was down -1.8% on a year-on-year basis following solid growth of 2.2% in the previous month.
Mail Order/Telephone Order also saw a return to contraction following growth in the previous period, with spending down -2.2% (October: +1.2%).
High street spending, was down for a second successive month on an annual basis, albeit at a much slower rate. According to the latest adjusted data, spending fell by -0.7% compared to levels seen one year ago. That followed a -3.8% reduction seen during October.