Weak spending ‘indicates state of economy’

A slowing in consumer spending offers a fair indication of the state of the economy, Capital Economics claims.


A slowing in consumer spending offers a fair indication of the state of the economy, Capital Economics claims.

A slowing in consumer spending offers a fair indication of the state of the economy, Capital Economics claims.

The research consultancy remarks that spending is two-thirds of economic activity, with retail sales making up just under half of that total.

Jonathan Loynes, chief European economist for the research analysts, describes retail sales as ‘a pretty good barometer’ of overall financial conditions and the state of the economy.

‘It is affected by changes in unemployment, changes in interest rates, what’s happening in the housing market and all of those things at the moment are clearly having a negative influence,’ he adds.

The latest figures from the British Retail Consortium show in July the value of retail spending fell by 0.9 per cent on July 2007 – a period which had itself seen slow sales because of wet weather.

Retail spending has also been down on last year in four of the past five months – the worst figures since 2005.

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