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

FacebooktwitterredditpinterestlinkedinmailFacebooktwitterredditpinterestlinkedinmail

image002

Consumer spending in June was up 2.1% 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%% on last year, driven by a 17% rise in spend on family clothing and a 9% rise in women’s clothing. Restaurant spending, meanwhile, grew by 13% 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% year-on-year, helping drive down the average amount spent per transaction in-store by 5.5% on last June.

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

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

Electronics store spend was up 14% 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% on last year and online spending was up 7%, driven by high levels of spending on clothing (family clothing was up 23%) and online electronic stores (29%).

Regionally, Northern Ireland saw strong spending growth of 3.2 %; whereas spending in Scotland and the East Midlands was up just 1.2% – 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%

 Spend growth across the UK regions in the main retail categories (June 2013 – June 2014)

Highlighted are the top three and bottom three performing regions for each category of spend

Region Airlines Department Stores DIY Stores Electronic Stores Furniture Stores Restaurants Petrol Supermarkets Clothing
Northern Ireland 0.0% 0.1% 7.6% -2.6% 11.6% 14.3% 2.2% 1.9% 4.2%
Scotland -10.0% -1.1% -1.2% 1.4% 9.1% 9.0% -5.6% 2.7% 11.2%
North East -7.9% -3.8% -0.5% 10.7% 7.9% 15.5% -5.2% 3.9% 9.1%
Yorkshire and the Humber -1.1% -0.6% 1.8% 9.3% -1.0% 12.5% -4.5% 2.3% 7.7%
North West -3.8% 2.1% 1.8% 6.3% 2.9% 13.4% -4.7% 4.6% 8.2%
East Midlands 0.0% -4.4% 2.4% 12.0% 0.2% 9.7% -4.2% 5.0% 9.6%
West Midlands -1.3% -2.5% 2.2% 9.7% -3.4% 12.0% -4.9% 6.0% 8.8%
Wales -3.6% 3.1% 2.1% 7.8% 4.7% 15.5% -2.9% 3.3% 11.1%
East of England 3.2% -2.0% 3.4% 3.2% -4.6% 14.7% -5.9% 2.8% 11.9%
London 0.9% -2.8% 5.4% 5.0% 4.9% 13.6% -3.8% 2.4% 10.0%
South East -2.0% 1.4% 2.9% 6.4% -2.9% 11.8% -4.5% 1.9% 11.7%
South West 2.3% -10.0% 5.4% 6.7% -7.2% 12.5% -4.5% 1.9% 12.3%