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UK consumer outlook remains depressed, April surveys show
UK consumer spending remained depressed at the start of the second quarter, as April saw households rein in spending for the 11th out of the past 12 months and high street shops being particularly hard hit.
Visa's consumer spending index showed another 2.0% year-on-year drop for April, following declines of 2.0% and 1.0% in the preceding two months. The index, which is compiled by IHS Markit, is seasonally adjusted.
Spending in shops decreased 5.4%, which was the most rapid fall for six years, coming on the back of a 2.9% decline in March, while online spending was down just 0.1% after a 1.1% fall in March.
Discretionary spending on furniture, electrical appliances and recreational activities was the worst hit. The only two sectors to record higher spending volumes were health & education and hotels, restaurants & bars, though the latter rose at the softest pace since last August.
A separate survey on retail footfall from the British Retail Consortium (BRC) and Springboard showed a 3.3% decline in April, following a 6% decline in March, that resulted in an "unprecedented" 4.8% decline over the two-month period, with no growth in footfall for any UK region.
"With inflation beginning to fall and wages growing faster than expected in recent months, it would have been easy to assume we might be over the worst of the consumer squeeze," said Mark Antipof, chief commercial officer at Visa. "Yet there has been no corresponding improvement in spending, with April's 2% decline a simple repeat of what we witnessed in March."
"Low confidence levels amongst shoppers and the gloomy outlook for the UK economy are likely to have contributed to this continued caution," he added, pointing to the spread of sector spending as evidence that consumers remained in belt-tightening mode.
The spending index is based on actual spending on all Visa cards, which accounts for more than £1 in every £3 spent in the UK, adjusted to also reflect spending using cash and cheques. It was one of the indicators that flagged the slowdown in GDP in the opening quarter of 2018.
Tighter belts and changing consumer behaviour resulted in 9.2% of town centre shops standing vacant in April, up from 8.9% in January, though Greater London's rate improved to 3.6% from 5.6%.
Helen Dickinson, chief executive of the BRC, said the wet start to April had a dampening effect on shop visits across the UK, exacerbated by changing consumer behaviour.
"That shift in the way we shop, coupled with a highly challenging business environment, is having a significant impact on the nation's high streets: in April nearly 1 in 10 shops in town centres was vacant."
An inquiry was launched earlier this month into the future of the country's high streets and town centres, with parliament's housing, communities and local government (HCLG) committee examining "the future role of the high street in contributing to the local economy and the health, cohesion and cultural life of the local community and the challenges faced amid changing demographic, technological and other trends in recent decades".
Dickinson called on policy-makers to help support the retail industry and "the re-making of our high streets" through new policies to allows retailers to adapt to the internet-driven structural shift.
Visa's consumer spending index showed another 2.0% year-on-year drop for April, following declines of 2.0% and 1.0% in the preceding two months. The index, which is compiled by IHS Markit, is seasonally adjusted.
Spending in shops decreased 5.4%, which was the most rapid fall for six years, coming on the back of a 2.9% decline in March, while online spending was down just 0.1% after a 1.1% fall in March.
Discretionary spending on furniture, electrical appliances and recreational activities was the worst hit. The only two sectors to record higher spending volumes were health & education and hotels, restaurants & bars, though the latter rose at the softest pace since last August.
A separate survey on retail footfall from the British Retail Consortium (BRC) and Springboard showed a 3.3% decline in April, following a 6% decline in March, that resulted in an "unprecedented" 4.8% decline over the two-month period, with no growth in footfall for any UK region.
"With inflation beginning to fall and wages growing faster than expected in recent months, it would have been easy to assume we might be over the worst of the consumer squeeze," said Mark Antipof, chief commercial officer at Visa. "Yet there has been no corresponding improvement in spending, with April's 2% decline a simple repeat of what we witnessed in March."
"Low confidence levels amongst shoppers and the gloomy outlook for the UK economy are likely to have contributed to this continued caution," he added, pointing to the spread of sector spending as evidence that consumers remained in belt-tightening mode.
The spending index is based on actual spending on all Visa cards, which accounts for more than £1 in every £3 spent in the UK, adjusted to also reflect spending using cash and cheques. It was one of the indicators that flagged the slowdown in GDP in the opening quarter of 2018.
Tighter belts and changing consumer behaviour resulted in 9.2% of town centre shops standing vacant in April, up from 8.9% in January, though Greater London's rate improved to 3.6% from 5.6%.
Helen Dickinson, chief executive of the BRC, said the wet start to April had a dampening effect on shop visits across the UK, exacerbated by changing consumer behaviour.
"That shift in the way we shop, coupled with a highly challenging business environment, is having a significant impact on the nation's high streets: in April nearly 1 in 10 shops in town centres was vacant."
An inquiry was launched earlier this month into the future of the country's high streets and town centres, with parliament's housing, communities and local government (HCLG) committee examining "the future role of the high street in contributing to the local economy and the health, cohesion and cultural life of the local community and the challenges faced amid changing demographic, technological and other trends in recent decades".
Dickinson called on policy-makers to help support the retail industry and "the re-making of our high streets" through new policies to allows retailers to adapt to the internet-driven structural shift.
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