UK household spending rises for first time in four months in August, Visa says

UK household spending moved back into the black for the first time in four months during August, with outlays rising year-on-year driven by the e-commerce sector, the results of a closely-followed survey revealed.

The latest Visa UK consumer spending index data showed that UK household spending increased for the first time in four months in August with a 0.3% year-on-year increase in expenditures, compared to a decrease of 0.8% in July.

Growth was strongest in the e-commerce sector, where, according to the data, expenditures rose 6.5% year-on-year.

That marked a rise on the 3.6% rate of increase seen in July and marked the quickest clip in three months. It was also faster than the year-to-date average of 4.4% seen thus far in 2017.

In contrast, spending through face-to-face channels fell for a fourth successive month in August, by 2.6% on an annual basis in August, although that did mark an improvement on the 3.7% decline observed in July.

Also according to the survey, five out of the eight broad expenditure categories registered higher spending volumes on an annual basis in August, with the three strongest gains being recorded in: miscellaneous goods & services, hotels, restaurants & bars and recreation & culture, which saw increases of 10.1%, 2.5% and 2.3%, respectively, from 4.9%, 6% and 1.3% in the previous month.

Visa also noted how spending on household goods registered its first upturn in nine months, although the pace of expansion was only slight.

Meanwhile, spending in transport & communication experienced the fastest decline in August, although the pace of contraction was the slowest since March.

Slight reductions in expenditure were also visible in the food & drink as well as clothing & footwear categories.

In terms of outlook, Kevin Jenkins, the UK & Ireland's managing director at Visa, cautioned against interpreting the August data as a sign that the 'squeeze' on household spending was easing.

"Consumer spending in August has bucked the trend of the previous three months, registering a marginal increase against the same period last year. Nevertheless we are wary about taking this as a sign that the household squeeze is easing given the clear slowdown in spending during the preceding three months."