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Solid overall spending growth in December, but e-commerce the clear winner at Christmas

Visa Europe | Visa

4 min read Partner content

- Consumer spending increases solidly in December (+2.3% year-on-year), rounding off 2015 as the second strongest year since 2008 - Sharp rise in e-commerce spending (+7.4%), but face-to-face spending is broadly flat (-0.1%) - Growth led by Hotels, Restaurants Bars (+8.1%), Household Goods (+4.9%) and Recreation Culture (+4.8%)

Visa Europe's UK Consumer Spending Index signalled a solid increase in expenditure during December. On an annual basis, spending rose +2.3%, up from +1.0% in November, and the strongest rate of growth since July. Higher expenditure was also noted on the quarterly spending measure, while a modest decline was seen month-on-month.

Looking at 2015 as a whole, expenditure increased at an average annual rate of +2.3%, down only slightly from the equivalent figure for 2014 (+2.5%), where growth hit a post-crisis high.
As has been the case for much of the past two years, e-commerce spending increased at a robust pace in December. Furthermore, it was the quickest rate of growth in six months (+7.4% year-on-year). In contrast, face-to-face spending was little-changed from December 2014 (-0.1% on the year).

Spending growth was led by higher expenditure in the Hotels, Restaurants Bars (+8.1%), Household Goods (+4.9%) and Recreation Culture (+4.8%) categories. Meanwhile, the Clothing Footwear (-1.0%) and Transport Communication (-1.2%) sectors both saw a slight fall in spending volumes during December.

Kevin Jenkins, Managing Director UK Ireland at Visa Europe commented:

“Despite concerns about Black Friday limiting growth in December, consumer spending rose solidly last month as retailers benefited from the traditional spending surges in the days just before and after Christmas.

“Much of the stampede took place online though as shoppers took to mobiles, laptops and computers to buy Christmas presents. Evidence also suggests people were spending more online closer to Christmas, perhaps as a result of shorter delivery time and click collect options. In contrast, high street spend remained broadly flat.

“Overall, December rounded off a very strong year for consumer spending, with average monthly growth of 2.3%, as a mix of rising wages, near-zero inflation and a retail price war put more money into consumer pockets. This is the second strongest performance since 2008, only slightly below 2014 when growth hit a post crisis high.”

Annabel Fiddes, Economist at Markit said:

“The Visa Europe UK Consumer Spending Index data for December pointed to a solid increase in expenditure, with spending volumes up +2.3% on an annual basis. This followed a relatively modest increase in November (+1.0% year-on-year), where a particularly strong November 2014 weighed on annual growth.

“Encouragingly, the majority of spending sectors enjoyed higher expenditure in December. However, spending was down slightly in the Clothing Footwear category, perhaps due to the particularly mild December.

“Overall, the latest figure rounds off another solid year of consumer spending growth for 2015, where the average annual rate of growth of +2.3% was down only slightly from a post-crisis high +2.5% in 2014. Looking ahead, it’s likely that expenditure growth will be maintained, underpinned by a number of positive economic factors such as rising real wages, stagnant price trends and record-low interest rates.”

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.

Imogen Hawthorne, Paisley Immy Cakes, Birmingham:
“As expected December was a manic month much like last year. We experienced an upsurge in the number of orders we received as well as a boost in order value as the month progressed.
Our site and social media pages also experienced increased traffic towards the end of the year. We’re prepared for the busy period to roll into 2016 as we’ve already started to receive some
January orders.”

Tony Bailey, Top Notch Hair Beauty, Manchester:
“December’s figures were lower than expected due to wet weather keeping our clients off the high street. Business from our male customers remained fairly steady as they continued to come
in for routine cuts, but women were more hesitant to schedule new styles and colours in the inclement weather. Those that did venture out of their homes treated themselves to more pampering as the average bill was up 1.5%.”

Quan Nguyen, Chi Café, London:
“December is often a quieter month for us, especially nearer to Christmas, as office workers in the area start to leave for the holiday. Last month was no exception, sales dipped from the previous month, but were slightly higher than in December 2014. The year-on-year improvement might have been down to the higher average spend per person we’ve seen in the last couple of months. We’re positive that total number of sales will pick up in January when people return to work after the holiday.”

Read the most recent article written by Visa Europe - Latest spending figures show record highs




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