Consumer spending flatlines in February despite positive economic sentiment
Consumer spending in February was flat, rising just 2%, with positive economic sentiment failing to translate into higher pay packets, according to new data from Barclaycard, which processes nearly half of all the UK’s debit and credit transactions.
• UK consumer spend up just 2% year-on-year continuing trend of muted growth that began in Q3 2013
• Essential spend continues to struggle with supermarket spend down (0.8%), while petrol spend fell sharply both in amount spent (down 6%) and number of transactions (down 2.8%)
• Booming housing market reflected in DIY spend which was up 11.3%
Despite a six year high in consumer confidence and recent falls in unemployment wage growth remains sluggish, and this is directly impacting consumer spending.
While online spending continued to grow, up 8.6% year on year in February, the high street struggled with no spend growth at all instore.
Restaurants and clothing continued to perform well with spend up 10.8% and 5.8% respectively. This was countered by falls in spending in supermarkets (down 0.8%) and department stores (down 1.1%).
The star performer was DIY spend which hit a two year high, up 11.3%.
The average amount spent per transaction continued to come down – falling 3.9% on last year and 5.4% on 2012. A legacy of the economic downturn is shoppers’ consistent search for value and determination to save money on their purchases.
Val Soranno Keating, CEO Barclaycard, said: “The positive noises on the economy and unemployment have yet to drive significant increases in consumer spend. While consumers feel more confident than they have for several years, the upswing in spending growth that we saw in the middle of last year has slowed as pay packets are not matching the performance of the wider economy. Until we see stronger wage growth, spending will likely continue to be muted.”
Category spend
Sales in the overall retail sector slowed down in February. But clothing still rose by 5.8% boosted by the strong performance in family clothing (10.5%). Shoe shops (8.9 per cent) also saw impressive spend increases compared to last year. However, department store spend dipped in the red again after seeing three consecutive month of positive growth.
Spend at jewellers was up a decent 6.1% year on year, possibly reflecting consumers’ appetite to buy more expensive presents for Valentine’s Day.
The travel and entertainment sector painted a mixed picture. Restaurants continued their winning streak, witnessing strong growth of 11.3%, in line with what we saw for the majority of 2013. On the other hand, spend at cinema/theatre declined compared to the same time period in 2013. Airline (2.6%) continued to see a moderate increase.
Regional spend
Wales had a tough February with spend growth of just 0.6%. London fared best up 3%, closely followed by the North East up 2.9%.
