Consumer spending falls as clothing and footwear sector struggles

Consumer spending falls as clothing and footwear sector struggles

Consumer spending dropped in July compared to a year ago, a new report has revealed.

The Consumer Spending Index, which measures expenditure across all payment types including cash, cheques and electronic payments, signalled another reduction in household expenditure last month.

Spending was down 0.3% year-on-year, the third successive decline.

The latest fall, however, was only marginal, dropping from the 2.6% decrease seen in June to the lowest in the current sequence of falling spending.

ECommerce spending showed a return to growth at the start of July, following a marginal reduction in the previous month.

Expenditure was up 2.5% year-on-year, the fastest rise in four months, but still one that was much weaker than the average since the series – produced by IHS Markit – began in September 2014.

Face-to-face spending remained the main source of weakness in July, with a reduction in expenditure for the third month running.

Mirroring the overall picture, however, the decline of 1.6% year-on-year was the weakest in the current period of decline.

Sector data suggested that the overall reduction in spending was centred on three categories, namely food and drink (-1.3%), clothing and footwear (-4.6 %) and miscellaneous goods and services (-4.9%).

In each case, however, rates of contraction eased from those seen in June.

Clothing and footwear has now seen spending decrease on an annual basis in 12 of the past 13 months.

The five remaining sectors all recorded growth of expenditure in July, led by household goods where the rate of expansion rebounded to a three-month high of 6.3% year-on-year.

Recreation and culture (+2.7%) also saw growth pick up, while hotels, restaurants and bars registered a slight slowdown of 2%.

Returns to growth were seen in the transport and communication (+1.6%) and health and education (+3.4%) categories.

Philip Konopik, Visa Ireland manager, said: “The latest Irish CSI figures are an improvement on June, however, there remains a continued lack of growth in household expenditure at the start of the third quarter of 2019.

“The return to growth of eCommerce in July, up 2.5% year-on-year following a 0.5% decline last month, was not enough to turn the tide with overall spending down 0.3% year-on-year.

“Looking at the sectoral data, clothing and footwear continues to struggle with spend declining 4.6% year-on-year, but some bright spots remain with household goods, recreation and culture and hotels, restaurants and bars continuing to show uplifts in spend year-on-year.”

Andrew Harker, associate director at IHS Markit, said: “Although improving from the worrying picture seen in June, a third successive decline in consumer spending in July extends the generally weak trends seen in recent months.

“The high street continues to struggle, with clothing and footwear remaining under pressure.

“While labour market conditions remain supportive, other areas such as consumer confidence, retail sales and business activity chime with the challenging environment highlighted by the CSI as the prospect of a no-deal Brexit seems to become more likely.”

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