According to Visa Europe’s UK expenditure index, consumer spending registered its strongest monthly growth in over three years last month. The study believes improvements in the job market and increases in disposable incomes contributed to the 3 percent increase in month-on-month household spending, the largest since May 2009.
“Going forward, it seems likely that consumer spending will help boost the economy to a greater extent than it has done over the past two years, due to recent improvements in disposable incomes, lower inflation and rising employment,” Chris Williamson, chief economist at Markit, explained.
Consumer spending in hotels and restaurants had the strongest growth rate of 8.2 percent, followed closely by clothing and footwear spending with a rise of 6.1 percent. Meanwhile, online spending was down 1.5 percent and mail and telephone ordering fell 3.7 percent.
But despite the rise in consumer spending, consumer confidence remains low.
“However, consumer confidence remains historically low as uncertainty about the economy and job security persists, suggesting that the bounce in spending seen in the third quarter could be as good as it gets for the foreseeable future,” Williamson warned.
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