Feel-good factor buoys spending

The recovery in consumer spending seems to be becoming more entrenched. While better weather has helped support sales, the underlying picture has also strengthened. Both retail sales and non-retail spending have continued to expand. And with growing signs of life in the housing market, consumer confidence on the rise, and expectations among households that interest rates will stay lower for longer, at least some of the ingredients are in place for a further boost in the consumer sector’s fortunes. That said, with real pay set to continue falling into next year and households eating into their savings, the resources to sustain growth in sales still look lacking.