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Consumer spending nudges up in June but weak wage growth still holding households back

Thu Jul 10 07:00:00 EDT 2014

  • UK consumer spend grew 2.1 per cent year-on-year in June – slightly down on April and May but ahead of inflation for the third month in a row
  • Spending at ‘discount’ retailers rises again and average transaction values fall as consumers trade down and search for value
  • Electronics spending up by 14 per cent ahead of the football in Brazil, with spending in pubs up 9.6 per cent and in supermarkets up 13.6 per cent on the day of England’s first game

Consumer spending in June was up 2.1 per cent compared to 2013, as consumers once again spent more on clothing and eating out, according to the latest monthly update from Barclaycard, which processes nearly half of all the UK’s debit and credit card transactions.

Spending on clothing was up 10 per cent on last year, driven by a 17 per cent rise in spend on family clothing and a 9 per cent rise in women’s clothing. Restaurant spending, meanwhile, grew by 13 per cent year-on-year, posting double-digit growth for the eleventh month in a row, as one of the hottest Junes on record encouraged people to get out of the house and go for a bite to eat.

Conscious of the need to continue to balance the books in the face of weak wage growth however, consumers reined-in  spending on ‘essentials’ – predominantly at supermarkets and on petrol – and shied away from department stores in favour of ‘discount retailers’.

Cut-price clothing outlets, budget grocery stores and discount retailers saw spending soar 23 per cent year-on-year, helping drive down the average amount spent per transaction in-store by 5.5 per cent on last June.

Public transport spending was up 7.6 per cent, whilst petrol spending fell 4.6 per cent, as households switched from using the car to taking the bus to save money. Department store spending was down 2 per cent – its worst performance since July last year.

International football leads to increases

The start of a summer of international football led to increases across certain categories. Spending at off-licences was up significantly (23.1 per cent) on the day of the first England game, as was that at supermarkets (13.6 per cent) and in pubs (9.6 per cent).

Electronics store spend was up 14 per cent in the two weeks leading up to the tournament as consumers bought the latest TVs and gadgets on which to watch the games. But it slowed significantly after the competition had started, possibly in line with the performance of the England team.

In-store spending growth nudged up 0.8 per cent on last year and online spending was up 7 per cent, driven by high levels of spending on clothing (family clothing was up 23 per cent) and online electronic stores (29 per cent).

Regionally, Northern Ireland saw strong spending growth of 3.2 per cent; whereas spending in Scotland and the East Midlands was up just 1.2 per cent – coming in below inflation.

Chris Wood, Managing Director, Barclaycard, said:

“Even as unemployment continued to fall and consumer confidence reached its highest in nine years, consumer spending growth slipped slightly in June as weak wage growth continued to hold households back.

“Earnings growth overtook inflation in the first quarter of the year but has since fallen back, limiting households’ ability to spend more. What spending growth we are seeing is predominantly down to the current record level of employment creating more income in the economy, rather than households spending more in real terms – a case of more people spending, not people spending more.

“So until we see wages steadily and consistently increasing above inflation, it’s our view that spending growth will remain comparatively muted.”

Spending in detail

Total spend growth in select categories (June 2013 – June 2014)

Rising

 

Falling

 

Family clothing

16.5%

Furniture stores

–0.1%

Restaurants

12.7%

Airlines

–1.2%

Women’s clothing

9.4%

Department stores

–2.0%

Jewellers

8.0%

Men’s clothing

–4.6%

Public transport

7.6%

Petrol

–4.6%

Electronic stores

6.6%

Garden centres

–8.7%

 

Online spend growth in top performing categories (June 2013 – June 2014)

Rising

 

Men’s Clothing

47.2%

Women’s Clothing

39.3%

Electronic Stores

29.1%

DIY Stores

28.9%

Family Clothing

23.0%

Hotels

21.6%

 

Total spend growth across the UK regions (June 2013 – June 2014)

All regions

 

Northern Ireland

3.2%

London

2.8%

East of England

2.5%

South East

2.4%

South West

2.4%

North East

2.4%

North West

1.8%

West Midlands

1.6%

Wales

1.5%

Yorkshire Humber

1.4%

Scotland

1.2%

East Midlands

1.2%

 

 

 

Notes to editors

For more information please contact Tom Foxton, Media Relations Manager, Barclaycard, on 07880 184381.

Barclaycard processes nearly half of all card transactions in the UK, including our UK credit card business, UK payment acceptance business and spending on Barclays debit cards.

All data in this release relates to the period 25 May 2014 to 28 June 2014 and compares it with 26 May 2013 to 29 June 2013.

 

 

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