Households to rein in spending in Q2

Some of the surge in consumer spending growth from 0.3% q/q in Q4 to 0.7% q/q in Q1 might have been due to households bringing forward purchases ahead of the original 29th March Brexit deadline. If so, then it seems likely that consumer spending growth will slow in Q2, perhaps back to 0.3% q/q. Indeed, retail sales volumes didn’t rise at all in April and seasonally adjusted car registrations dropped by another 3.4% m/m. However, the recent robust rises in employment and wages have put more money in people’s pockets. As such, and despite the ongoing political turmoil, household spending growth is unlikely to slow sharply.