Brexit clouds the outlook for consumers

The slump in retail sales volumes in December is not too worrying given that it seems to have largely reflected consumers bringing forward Christmas purchases in order to take advantage of ‘Black Friday’ discounts. After all, sales rose sharply in November, particularly for goods such as household appliances and watches & jewellery. But even so, the consumer sector lost momentum at the end of 2018. Retail sales volumes fell by 0.2% in Q4, and overall consumer spending growth seems to have slowed too. Given that employment and earnings growth have remained strong, Brexit worries are probably to blame. While that means consumer spending growth will probably remain fairly subdued in Q1 of this year, the prospects for consumer-facing sectors will brighten if and when the Brexit uncertainty lifts.