Barclaycard: UK economy in recovery mode as consumer spend grows in August

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Sales growth

Sales growth

Consumer spending in the UK continued its positive momentum in August 2013, according to Barclaycard’s monthly analysis of UK spending.

Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, said spending grew 4.4% year-on-year in August 2013, the fourth month in a row that has seen spend growth above 4% and the fifth straight month for positive real spend growth.

 The leisure and entertainment sector was particularly strong as families across the country took advantage of one of the best summers in recent times. Restaurant spend grew 13.3% compared to August 2012, cinema and theatre spend grew 8.1% and hotel spend was up 6.7%.

Spending fell on clothing (-0.6%) and groceries (-0.1%), as did electronics (-1.4%) and department store (-0.8%) purchases, as households shifted their spending to holidaying and treating the family.

Airline spend growth also slowed dramatically, increasing by just 2.3% year-on-year compared to double figure growth in February, April, May and July, suggesting the good weather saw families resisting the urge to book holidays to the sun.

August’s strong performance reinforces the view that households are continuing to shake off the economic downturn last month, a sentiment echoed by recently-published economic data charting a rise in UK consumer confidence. 

In-store spending by category
Rising                                       Falling
Restaurants +13.3% Electronic Stores -1.4%
Cinema/Theatre +8.1% Family Clothing -0.9%
Hotel +6.7% Department Stores -0.8%
DIY Stores +6.4% Supermarket -0.1%
Public Transportation +5.0%    

 

Soranno Keating: weather provides sales boost

Soranno Keating: weather provides sales boost

Val Soranno Keating, chief executive of Barclaycard, said: “Rising consumer confidence pushed spending growth above 4% in August for the fourth straight month as households continued to shake off the economic downturn.  It’s a trend we’ve seen for most of this year and has helped establish 2013 as the year of recovery.

“The weather has undoubtedly helped. It was confirmed last week we’ve enjoyed one of the warmest summers on record and the consumer response has been to hit the high street, with in-store spend growing in August by a robust 3.3% versus last year – the second highest level this year. Spending on eating out, holidaying in the UK, and doing up the house grew particularly strongly in August.

“When set alongside the other economic news we’ve seen recently, and with forecasters predicting an above average September weather-wise, we expect this month to be another positive one and for UK PLC to end the third quarter on a high.”

Online vs. offline spend

Online spending growth improved from July 2013 (to 9.9% from 8.5%) but still slowed compared to prior months as the summer weather helped drive up high-street footfall.

Most categories of online spend remained up on 2012 in August, with online furniture stores spend seeing an impressive 36% growth and women’s clothing up 32% on a year-over-year basis. Meanwhile, despite bricks and mortar department stores struggling, online versions saw strong growth of 16% compared to 2012.

Rising
Furniture Stores +36%
Womens Clothing +32%
Department Store +16%

Regional spend

London continued to top the regional spending list with the strongest year-on-year spend growth (6.0%) of the 12 regions, followed by Northern Ireland (5.1%). While Scotland spend growth of 3.4% remained at the bottom.

Total spending by region
Region Overall spend growth in Aug 2013 vs. Aug 2012
London 6.0%
Northern Ireland 5.1%
East of England 5.0%
East Midlands 4.6%
South East 4.6%
South West 4.4%
North West 4.3%
North East 4.2%
Yorkshire Humber 4.0%
West Midlands 4.0%
Wales 3.8%
Scotland 3.4%