Visa’s Consumer Spending Index for May, which has launched today, shows a fall in consumer spending for first time in nearly four years. Compiled by Markit, the Index is distinct from Visa’s business performance and reflects overall consumer spending, not just that on cards.
Headline findings
First fall in household expenditure since 2013 (-0.8 per cent on the year)
Face-to-face spending declines notably (-5.3 per cent), while e-commerce rebounds (+6.9 per cent) after weak April (-0.3 per cent)
Clothing and footwear (-5.2 per cent) and household goods (-4.1 per cent) among the weakest performing sectors in May
Kevin Jenkins, UK & Ireland managing director at Visa comments, ‘Consumer spending fell for the first time in nearly four years in May, following some marked slowdowns in growth since the beginning of the year. Our Index clearly shows that with rising prices and stalling wage growth, more of us are starting to feel the squeeze.
‘Retailers of non-essential goods were among the worst hit, with clothing and household goods seeing sharp declines in sales. The experience sectors continued to record some growth, though at much softer rates, suggesting consumers were reining in their discretionary spending.
‘Bricks-and-mortar retailers had a particularly challenging month, with sales dropping at the quickest level in over five years, at a time when warmer weather and the May bank holidays would usually drive shoppers on to the high street. Online retailers, on the other hand, fared well, with spend up 6.9 per cent.’
What UK businesses are saying
Visa is tracking the sentiment of several small businesses across the UK on a monthly basis, asking about their views on the economy, business conditions and forecasts for the month ahead.
Tony Bailey, Top Notch Hair & Beauty, Manchester
Although our average bill remained the same, the number of visits was significantly lower in May. We feel this may have been due to people saving for holidays and increased competition in our area. Food price rises could have an impact on us too, as people may have less money to spend on pampering themselves.
Josh Beer, The Illustrious Pub Company, Cambridgeshire
More of our customers gravitated towards deals and offers in the past month, it feels as though they were biding their time, and cutting back until they became more confident in the economy. We also face other challenges – price rises and minimum wage increases in particular are forcing us to explore ways to make our business more cost-efficient. We’ve scaled back our services and no longer offer add-ons such as contract catering.
Gayle Haddock, Carry me home (Children’s Clothes), London
We had more sales in the first half of the month, as parents bought holiday essentials for their kids. But overall revenues didn’t improve much from the previous month. Since becoming an online-only retailer, we’ve had to look for ways to be savvy on social media to promote our stock.
Further reading on consumer spending
