Online Shopping Leads Recovery in U.K. Consumer Spending

(Bloomberg) -- U.K. consumer spending jumped the most since 2016 last month, led by a surge in Internet purchases as bars and restaurants continued to suffer.

On-line demand surged 16.2% in July compared with a year earlier, according to a monthly index by Visa and IHS Markit. Total spending rose 2.4%, while hotels, bars and restaurants say an 18% drop.

Household goods, as well as food and beverages continued to see improvement. But the slump in face-to-face spending has already led to store closures and job losses. Retail chain Marks & Spencer Group Plc this week announced that it would reduce headcount by about 7,000, adding to a list of companies that are scaling back operations.

Visa said the spending figures are moving the right direction but it’s “cautious” about the outlook. Unemployment is rising, and the ending of the government’s wage-support program in October could lead to further job losses and weakness in consumer confidence.

“The path to economic recovery remains fragile,” said Annabel Fiddes, an economist at IHS Markit. “The winding down of the government’s furlough scheme is likely to push up unemployment and, combined with weaker pay trends, could hinder any future rises in household consumption.”

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