The latest set of Visa Europe: UK Expenditure Index data pointed to a strong upturn in consumer spending with expenditure rising across annual, quarterly and monthly measures in April. Hotels, Restaurants Bars remained the strongest performing sector, with spending rising +7.8% on the year, while Household Goods also saw strong growth (+2.8%). Expenditure rose in Recreation Culture categories (+2.1%) and Misc Goods Services, which includes hairdressing and jewellery (+1.2%).
In contrast, spending at Clothing Footwear retailers continued to fall (-1.7%), albeit at the slowest rate in the current five-month sequence of decline. Expenditure meanwhile fell marginally in Food Drinks categories (-0.9%), following 12 successive months of growth. On a positive note, expenditure rose through all three spending channels in April, with Online retailers seeing the strongest rate of growth (+4.2% on the year).
Kevin Jenkins, UK Ireland Managing Director Visa Europe said:
“April was all about going out and sprucing up the home as consumers enjoyed the Easter weekend and a sunny second half of the month. Spend on household goods including furniture, home accessories and DIY rose as did trips to hotels, restaurants and bars.
“Overall spending volumes were 2% higher compared to a year ago, marking the strongest monthly growth rate since Black Friday boosted November’s figures. The improvements in household spending power could drive growth in consumer spending for several months to come, even as margins and price wars continue to depress total spend on the high street.”
Annabel Fiddes, Economist at Markit said:
“Household spending continued to increase at the start of Q2, with the latest set of Visa Europe: UK Expenditure Index data signalling a +2.0% year-on-year rise in spending during April. The sector data painted a mixed picture, however, with strong growth recorded once again at Hotels, Restaurants Bars and Household Goods, while spending fell at Clothing Footwear retailers and slightly in Food Drink categories. Overall, the positive expenditure trends are in line with an array of positive economic data for the UK, with unemployment at a multi-year low, wages starting to rise in real terms and a further improvement in consumer confidence.”
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:
“While we had more customers coming in through the door in April, they spent less, so total revenue was down slightly from the same month last year. We’re not exactly sure why, but it might be because people held back on spending due to concern about the election and how it may impact their finances.
“Overall, our business has enjoyed steady growth over the past year as the economy improves.”
Linda Anthony, Cotswold Celebration Company, South Gloucestershire:
“April revenue was up by 2.5% over the same month last year. It’s clear people have more money in their pockets and are more willing to splash out on parties and celebrations. Last year, on average
our customers spent around £100 for a party, this has increased to £250 this year.
“We’ve also benefited from the rise of the ‘sofa surfing’ trend with the majority of our sales now online orders.”
Imogen Hawthorne, Paisley Immy Cakes, Birmingham:
“We enjoyed a marked increase in revenue last month, mainly because we started supplying to a new vegan food shop. Apart from that, the return of the ‘feel-good factor’ has also helped boost our sales. Last year, our customers were more interested in basic cakes. Now they are not shy to pay extra for something really nice or special.”