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Consumer spending grows 3.4 per cent as UK shows modest recovery from the ‘Beast from the East’

Tue May 08 19:01:00 EDT 2018

  • Consumer spending rose 3.4 per cent year-on-year in April, with some evidence of a rebound in spending as shoppers ventured back outside after March’s cold snap
  • Expenditure on ‘nice-to-haves’ performed well, up 3.7 per cent, with entertainment still a bright spot (7.1 per cent)
  • Essential spending slowed to a 21-month low (1.8 per cent) driven by supermarkets decelerating to just 1.6 per cent
  • While overall confidence in household finances remains stable, the potential for an interest rate rise continues to weigh on consumers’ minds – with over a third (35 per cent) indicating they would cut back their spending as a result of a rate hike

Consumer spending increased 3.4 per cent year-on-year in April, recovering slightly from a slowdown in March (2.0 per cent), as Brits shifted their priorities from the previous month to help give spending on ‘nice-to-haves’ a boost.

Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows that non-essential spending rose 3.7 per cent year-on-year.

Entertainment proved a bright spot, rising 7.1 per cent, although failing to match the double-digit growth seen for much of 2017. Despite a mini-heat wave towards the end of the month, mixed weather throughout April – including a cold and rainy Easter weekend – kept pub (7.6 per cent) and restaurant (7.2 per cent) growth fairly modest.

Travel spending also increased 10.3 per cent, the highest growth since June 2015, thanks to a strong performance from airlines (9.9 per cent).

Essential spending slowed to a 21-month low of 1.8 per cent, meanwhile, driven by supermarket growth slowing to just 1.6 per cent – albeit both figures faced strong comparators from 2017 at 11.4 per cent and 10.3 per cent respectively.

The slight uptick in spending growth matches overall consumer sentiment, which has remained relatively upbeat: 62 per cent of Brits now say they feel confident in their household finances, on a par with the figure seen in March.

The potential for an interest rate rise is still a concern for many, however: over a third (35 per cent) of shoppers say they would have to cut back on what they spend each month should the base rate go up.

Of these, over half (54 per cent) would pare back on treats for themselves and others, while four in ten (44 per cent) would manage their finances by shopping at discount stores more often. A similar proportion (41 per cent) say they would rein-in on nights out, suggesting that even the ‘experience economy’ – which has performed strongly over the past year – is not immune.

Paul Lockstone, Managing Director at Barclaycard, said:

“While spending has recovered slightly from the effects of the ‘Beast from the East’, it’s likely we’ve seen some missing expenditure from March carry over to April as the weather finally allowed shoppers to venture back outside.

“Consumers prioritised spending on the ‘nice-to-haves’ last month, but there’s no indication that they are looking to loosen the purse strings quite yet. Instead, the UK seems to be caught in a holding pattern, with people still budgeting carefully. Looking ahead, uncertainty around interest rates is weighing on the minds of many, with people prepared to cut back on non-essentials in order to cope with a rate rise.”

 

Y/Y Spend growth by category

Overall

Online

In-store

Clothing

1.0%

13.2%

-4.5%

     Family Clothing

2.5%

17.8%

-3.9%

     Shoe Shops

-9.8%

4.1%

-14.4%

     Women’s Clothing

-1.3%

3.9%

-4.3%

     Men’s Clothing

6.0%

10.2%

3.8%

Restaurants

7.2%

27.0%

5.6%

Auto Parts & Accessories

4.7%

16.1%

0.7%

Cinema, Theatre & Dance

-5.2%

-3.8%

-8.4%

Public Houses

7.6%

1.5%

7.7%

Department Stores

-3.1%

8.4%

-5.8%

DIY Stores

-5.1%

-3.2%

-5.4%

Travel Agents

16.1%

21.0%

9.9%

Airlines

9.9%

10.2%

8.4%

Supermarkets

1.6%

14.1%

0.8%

Petrol

1.6%

44.2%

1.6%

Gambling

17.5%

37.5%

-31.0%

Vehicle Sales

-2.7%

7.3%

-2.9%

Hotels

2.5%

27.4%

-4.0%

Auto Repair Shops

2.4%

11.7%

2.1%

Sports Shops

-3.3%

3.5%

-5.8%

Furniture Stores

5.4%

30.9%

0.5%

Telecoms

4.7%

5.6%

3.9%

Household Appliances

-16.0%

-35.2%

-3.6%

Jewellers

-4.6%

8.8%

-6.5%

Sports and Games Establishment

4.6%

8.7%

2.2%

Garden Centres

-18.2%

-6.8%

-19.9%

Discount Stores

1.7%

16.0%

-1.3%

Gift Shops

-2.1%

-10.8%

0.3%

Floor Covering Stores

-0.5%

12.5%

-1.8%

Tourist Attractions

-6.0%

4.3%

-12.6%

Amusment Parks

-1.4%

-1.2%

-1.5%

Aquariums

-20.7%

30.7%

-31.6%

Electronic Stores

-0.4%

0.6%

-0.9%

Cosmetic Stores

4.9%

6.7%

3.1%

Optical Goods

0.6%

7.5%

0.4%

Overall

3.4%

13.4%

-0.5%

 

Online share of spend

Clothing

35.1%

Travel Agents

57.6%

 

Average Transaction Value

Overall

-4.3%

Clothing

-1.5%

Airlines

0.8%

Restaurants

-5.5%

Supermarkets

-2.8%

Petrol

-0.8%

 

Number of Transactions

Overall

8.2%

Clothing

2.6%

Airlines

8.7%

Restaurants

13.4%

Supermarkets

4.5%

Petrol

2.4%

 

Notes to Editors

For more information please contact Linda Yang on +44 (0)203 555 5586 or siyuanlinda.yang@barclaycard.co.uk

The monthly spend data in this release relates to the period 25 March to 21 April 2018. It is compared with 25 March to 21 April 2017.

The April consumer confidence data cited in this release are from YouGov Plc. Total sample size was 1,641 adults. Fieldwork was undertaken between 23rd – 24th April, and between 24th – 25th April 2018.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). Consumer survey findings going back to 2014 were also carried out by Longitude Research on behalf of Barclaycard. There were at least 2,000 respondents in each survey, providing a representative sample of adult UK consumers by age, gender, region, income group, professional status and family situation.

About Barclaycard

Barclaycard, part of Barclays Bank PLC, is a leading global payment business that helps consumers, retailers and businesses to make and take payments flexibly, and to access short-term credit and point-of-sale finance. In 2016 we processed over £250bn in transactions globally. Barclaycard is a pioneer of new forms of payment and is at the forefront of developing viable contactless and mobile payment schemes for today and cutting-edge forms of payment for the future. We also partner with a wide range of organisations across the globe to offer their customers or members payment options and credit.

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