15 Aug 2019 | 10.11 am
Consumers Spooked By Brexit Fears
Spending and sentiment both declined through July
15 Aug 2019 | 10.11 am
Visa’s Consumer Spending Index showed a marginal decline in consumer spending of 0.3%, an improvement on June’s decline of 2.6% but still the third decline in succession.
Shop spending was the main source of weakness, with expenditure down for the third month running, with a decline of 1.6% year-on-year the weakest in the current period.
E-commerce showed a return to growth, rising 2.5% year-on-year but much weaker than the average since the series began in September 2014.
Visa country manager Philip Konopik (pictured) said: “There remains a continued lack of growth in household expenditure at the start of Q3. Looking at the sectoral data, clothing and footwear continues to struggle.”
Food and drink and miscellaneous also declined, with the five remaining sectors all showing growth, led by household goods where expansion rebounded to a three-month high of +6.3%. Recreation and culture rose 2.7%, while hotels, restaurants and bars rose by 2% annually — a slight slowdown.
KBC’s Consumer Sentiment Index fell to 85.5 in July from 90.5 in June. The July reading was the weakest since November 2014, after modest gains through the two previous months appeared to hint that confidence might be improving.
KBC attributed the decline both to the increased risk of a no deal Brexit and what it called “some threatening domestic commentary on Irish economic prospects”.
Chief economist Austin Hughes said: “A substantial part of the relative improvement in Irish household incomes has occurred in the period since the UK’s Brexit referendum. However, through this same period Irish consumers have become increasingly concerned about the risk that Brexit could prompt a renewed and substantial deterioration in their economic circumstances.
“Consumers downgraded their expectations for their own personal finances in the July survey. Under one in five expect their household finances to improve in the next twelve months and the same proportrion beelive their financial circumstances will worsen.
“The only area to see an improvement in July relative to June was consumers’ assessments of how their financial circumstances had evolved over the past year. This largely reflected fewer consumers indicating their household finances had weakened of late.”