The UK consumer is caught in a holding pattern, showing resilience in the face of high levels of economic and political uncertainty.
At 3.9%, unemployment remains close to record lows. The tight labour market is exerting upward pressure on nominal wages, with average weekly earnings rising 3.8% y-o-y in the three months to August, outpacing the rate of inflation. This provides a timely boost to household disposable incomes ahead of the festive shopping season.
Consumer confidence gained slightly in September, rising 2 points to -12, but will remain under pressure as the Brexit deadline looms and a General Election appears likely.
Retail sales are also holding up better than expected, rising 3.1% y-o-y in September, despite gloomy reports of weak footfall due to wet weather. All retail categories recorded positive growth in volumes bought, with the exception of department stores and household goods.