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Barclaycard data shows consumer spending increased by 4.6% in July

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Consumer spending growth hit 4.6 per cent in July year-on-year, but it was a month of two halves thanks to the weather, according to the latest analysis of UK consumer spending by Barclaycard.

• Warm weather boosts high street spending at start of month, but heavy rainfall sees it fall flat towards the end
• Clothing spending up by 14 per cent in the first week, before plummeting to -4.3 per cent in the last week as the weather broke
• Wet conditions lead to consumers choosing ‘one-stop-shops’, benefitting department stores which saw in-store spend jump to 9.5 per cent in the last week of July
• Continued success of Jurassic World and launch of Magic Mike XXL help cinema spend growth out-strip many other categories

High temperatures at the start of the month brought consumers out onto the high street and helped drive up spending on clothing, in department stores and on electronics, leading to growth levels of 3.6 per cent and 2.1 per cent in the first two weeks for in-store spend.

But as temperatures dropped below average towards the end of July and a month’s worth of rain fell in one day in some parts of the country, people opted to stay in, causing in-store spend growth to fall in the third and fourth weeks of the month to 1.5 per cent and 0.1 per cent respectively.

Online shopping picked up some of the slack, with consumers spending 18.8 per cent more online when the weather turned – up from 12.3 per cent at the start of the month.

Where shoppers did venture out, they opted for one-stop-shops such as department stores which, as a result, saw in-store spend growth rise from 5.0 per cent in the first week to 9.5 per cent in the final week.

Spending on clothing was also consistent with the weather patterns. The higher temperatures and perceived ‘start to summer’ at the beginning of the month saw clothing spend up 14 per cent and 10.2 per cent in the first and second weeks respectively. But this plummeted when the weather broke, with growth contracting to 1.9 per cent and -4.3 per cent in the final two weeks.

Overall, growth in clothing spend across the month was 5.4 per cent – the highest level since the January sales – as consumers continued to treat themselves on the back of their improving personal finances.

Department store spending growth - up 8.8 per cent - reached its highest level in 18 months, only just being pipped by the 9 per cent growth in January 2014. The levels of extra spending in both categories firmly point towards strongly-improved trading for the respective sectors, lifting expectations of a strong summer for high-street retailers.

Spending on leisure and entertainment was up 12.8 per cent in July – its highest level this year. It was helped by a 30.1 per cent jump in cinema spending as Jurassic World continued its roaring success and a raft of new summer blockbusters were released. The release of Magic Mike XXL helped cinema spending out-strip many other categories in the final week when it was up 42.4 per cent on last year.

Pubs saw double digit growth of 15.5 per cent as people took advantage of the fine weather in the first part of the month, but they emptied out as the rains fell; growth nearly halved to 8.7 per cent in the last week. Consumers appeared to stayed at home and order a takeaway instead - spending on takeaway food was up 61.4 per cent at the end of July.

Chris Wood, Managing Director at Barclaycard, said:
“July was a prime example of how the weather impacts the way consumers spend their money. The heat wave that dominated the start of the month provided a lift to the high street – especially clothing and department stores – as consumers took to the shops to update their wardrobes. But as the weather deteriorated, winners emerged in different categories including cinema, which was also bolstered by summer blockbusters, and takeaways which consumers turned to avoid the damp and blustery conditions.

“Overall, the rise in discretionary spending in July echoes a six-month trend where consumers, supported by significant tailwinds such as zero inflation, rising wages and clear guidance on interest rates, feel more comfortable splashing out on the nice-to-haves.”

Source : Barclaycard Press Release

11 August 2015

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