Over the past few weeks, there has been a deluge of positive economic data emanating from the UK, which has given those in favor of Brexit plenty of reasons to be happy. The positive data has also supported the British pound. Since mid-August sterling has rallied from a low of around $1.28 to the pound to $1.34.
So it seems, the time being at least, that the UK economy is managing to dodge the economic catastrophe many economists warned of before the vote. That being said, it’s worth keeping in mind that Brexit hasn’t actually happened yet, and any data published before the UK even begins the process of separating itself from the European Union should be viewed with a large amount of scepticism.
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Still, the latest research to proclaim that all is well and good in the UK is Barclays’ UK spends trends figures from August. Barclays’ research draws on data from UK-issued Barclaycard consumer credit and debit cards, irrespective of the country in which the spending occurs and the figures showed a dramatic rebound Barclaycard spending during August.
Consumers don’t seem to care about Brexit for now
Consumer spending growth was 4.2% year-on-year in August according to the Barclaycard data, the highest year-on-year percentage increase since July 2015. Spending growth was reported at 2.6% year-on-year for July the date immediately after the Brexit vote.
It remains to be seen if this rebound in spending is any more than a dead cat bounce and as Barclays itself warns, it is still too early to sound the “all clear” on consumer spending.
Other indicators monitored by the bank showed no similar increases for the month of August. The bank’s measure of Underlying Spending Growth decelerated to 3.9% year-on-year, near the lows last seen during July 2013. This is despite the recent up-tick in the headline UK consumer confidence number, which increased 5 points to -7 in mid-August.
Moreover, Barclays’ Home Improvement index, which incorporates spending growth data from DIY, Furniture and Floor Covering stores fell slightly to 1.2%, the lowest level since July 2013. The other hand, vehicle sales growth picked up to 3.1% year-on-year in August compared to 1.8% for July and 0.3% year-on-year for June. Overall, both online and in-store spending growth increased. Online spending continued to grow at a double-digit rate reporting growth of 13.9% year-on-year for August compared to 12.3% in the previous month. In-store sales returned to positive territory growing 1.4% year-on-year compared to -0.3% for July.
All in all, a broadly positive consumer spending report from Barclays that seems to have calmed fears about a slump in consumer spending following the Brexit vote…for now at least.