There is encouraging news for retailers today as new figures show that UK high streets gave a robust performance in the first month of the year, with the hospitality industry leading the way.
Data compiled by Visa Europe has revealed that consumer spending increased by 1.3% compared with January 2014, with Hotels, Restaurants and Bars recording the most significant rise of 9.7%.
Clothing and Footwear retailers fared less well, however, showing an annual decline in takings of -3.3%; a trend that has continued over the previous four out of five months.
The fall in sales has worsened compared to the sector’s December 2014 performance of -2.4%, continuing a concerning pattern, which was only briefly curbed by ‘Black Friday,’ when shoppers turned out in their droves to snag pre-Christmas bargains.
Labour MP for Glasgow North Ann Mckechin said the figures showed "that many high street retailers in the key clothing and footwear sector are continuing to have a tough time. The squeeze on incomes is still impacting the retail sector and I suspect this trend will continue for some time."
The overall trend in consumer spending remains positive though, with January’s boost building on a similar annual rise in December of 1.2%.
Conservative MP Mark Garnier, who sits on the Treasury Committee, welcomed the findings as “good news and yet more proof that the Government's long term economic plan is still on track.”
"The Government is accused of creating a cost of living 'crisis', yet an increase in consumer spending does not reflect a society worried about finances.
“The increase is small, but positive and is yet more confirmation that the economy is getting itself back on track after a long period of uncertainty, with consumer confidence returning.
“It would be good to see the increase spread more widely, but the type of spending (on entertainment and leisure) demonstrates a more confident consumer,” he said.
Visa Europe’s UK & Ireland Managing Director, Kevin Jenkins, echoed Mr Garnier’s remarks, saying there was “no evidence of a New Year hangover on overall consumer spending, with a further solid increase in year-on-year spending in January,”
“Beating the January blues was a key reason for the rise as eating out and early holiday bookings have contributed to a near 10% spending boost in the Hotels, Restaurants and Bars sector.
“On the flip side, clothing retailers again found the going tougher. Consumer spending fell for the second month in a row and the fourth time in five months after a big Black Friday boost in November,” he added.
Other industries in Visa Europe’s UK Expenditure Index which achieved annual rises were Food, Beverages and Tobacoo at 4.9% and Household Goods at 1.3%.
As well as Clothing and Footwear the four other sectors that also suffered a decline in sales over the same period were Misc. Goods & Services (-5.4%), Transport & Communication (-2.4%), Recreation & Culture (-1.5%) and Health & Education (-0.6%).
Despite the modest falls Paul Smith, Senior Economist at Markit, considers the general picture to be a cause for optimism.
He said: “January’s UK Expenditure Index signalled the on-going expansion of consumer spending at the start of the year, led in the main by a further improvement in high-street spending, particularly in the Food & Drink category.
“The latest data adds further to the view that the UK economy continues to expand at a solid clip. With reduced energy and fuel bills set to provide a fillip to consumers’ disposable income in the coming months, there seems little reason to suggest that the recent positive trend won’t be maintained in the short-term at least.”