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Consumer confidence 'hits record levels'

Visa

3 min read Partner content

Consumer spending was up almost 3% in April in comparison to a year ago, according to the latest data from Visa Europe.

Market experts said confidence among consumers is hitting record levels. With unemployment at a five-year low and real wages starting to rise, all the signs are for growth to be sustained “at a decent pace” over the coming months.

The positive consumer spending news has been welcomed by one of the prime minister’s policy advisers.

Nadhim Zahawi, MP for Stratford Upon Avon, a Number 10 policy advisory board member, who also serves on the Commons Business, Innovation and Skills Committee, said:

“These figures from Visa are extremely positive and back up the great figures we've seen for business growth and confidence in recent months. The fact that consumer confidence is growing shows that our long term economic plan is working. This Government is balancing the books whilst delivering a sustainable balanced recovery.”

UK consumer spending increased by 2.9% year-on-year in April, up from 0.5% in March. Moreover, it was the strongest increase in household expenditure on an annual basis for four years. Meanwhile, consumer spending was unchanged on a monthly basis in April (+0.0%), following an increase in March (+1.4%).

The consumer spending data is from Visa Europe’sUK 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.

This distinguishes the Index from Visa’s corporate performance, and thereby provides a robust indicator of consumer spending habits.

Household expenditure increased on the quarterly measure in April (+1.2%), signalling that underlying spending trends improved over the month and at a similar rate to March.

Jeremy Nicholds, executive director of commercial development at Visa Europe said:

"The current drumbeat of positive economic news together with the return of warm weather is putting a spring in the step for consumers. Spending volumes were 2.9% higher compared to a year ago, marking the strongest growth rate seen in four years.

"While the later timing of Easter provided some boost to April’s performance, there is a fundamental improvement in consumer spending underway with growth recorded across almost all retail sectors and both online and in the high street. This broad-base improvement should help drive further ongoing growth as we move through the year."

He added: "Spending in the hotel and restaurant sector was particularly strong, up 7.3%, as the recent good weather encouraged people to spend more on eating out and leisure activities. Consumers also bought more clothing and footwear and spent further on home improvement projects, perhaps buoyed by recent reports of the strengthening housing market."

Household expenditure increased through Online, Face-to-Face and Mail/Telephone Order categories in April. This was the first time that spending rose simultaneously across all three channels since January.

Online spending rose by +4.9% on an annual basis in April, up from +3.8% in March. Moreover, this was the strongest year-on-year increase in 2014 so far. Face-to-Face expenditure increased by +3.4% year-on-year in April, and marked the steepest increase since May 2010.

Paul Smith, director at market experts Markit, said:

"April’s data pointed to a marked underlying improvement in consumer spending heading into mid-year, with the annual measure signalling the strongest increase in expenditure for four years. Although the timing of Easter played some role, growth was broad-based with spending volumes up for a whole host of goods and services including clothing, food, and recreational activities.

"The picture is now one of consumers benefiting from a stronger economic climate."