Consumer spending rebounded in May, rising 3.6%, after two months of weak growth which saw it fall to a two-year low, according to the latest monthly spending data from Barclaycard.
Warmer weather brought a seasonal boost for clothing, DIY, garden centres and entertainment, helping the high street post positive growth for the first time in seven months.
Pubs (15.2%), restaurants (12.3%), and hotels (6.4%) all saw a positive boost in spending as people made the most of the better weather and long weekend at the start of the month to enjoy some leisure time. The release of films including Captain America: Civil War, The Jungle Book and X-Men: Apocalypse also helped to boost spending on cinema by 13.3%.
Consumers’ confidence in their household finances rose to 60%, up from 57% in April, but confidence in the UK economy fell five points to just 30%.
High-street spending during the month rose 0.7% in the month, entering positive territory for the first time since October 2015; online spending, although slightly down on April, saw further double-digit growth of 12.5%.
In contrast, whilst spending on petrol declined (-3.4%), the rate of decline was at the slowest rate since Barclaycard began collecting spending data, due in large part to higher oil prices impacting on household outgoings. Combined with recovering supermarket spending (up 0.2% from -6.1% in April), spending on ‘household essentials’ entered into positive territory (0.5%) for only the second time in eighteen months.
Consumers seem to be generally more optimistic about issues over which they have some control, with confidence in their household finances rising 3 points in May to 60% (albeit still down from an average of 71%in 2015).
Barclaycard’s research showed a further deterioration in their confidence in the wider UK economy, however. This fell 5 points in May to just 30% as slowing wage growth, flat-lining employment rates and on-going uncertainty about the outcome of the EU referendum continued to cause significant concern.
And although May’s figures are a welcome return to stronger spending growth, the three month rolling average for this year, at just 2.4%, remains well below last year’s 3.9%.
Paul Lockstone, managing director at Barclaycard, said: “Warmer weather is generally a good pre-cursor for a positive uplift in consumer spending and May proved to be no exception. The eventual arrival of spring brought about a reversal of the fall we saw in spending on the home and clothing in March and April and acted as a welcome boost to retailers in those sectors.
“Consumers are increasingly confident in their ability to manage their own finances, but their view of the health of UK plc has continued to fall as a consequence of continuing nervousness over the wider economy. While it’s encouraging to see May’s numbers move sharply positive, 2016 spend is trending significantly below last year so it will be interesting to see whether these numbers are a seasonal blip or the beginning of a real and sustainable upturn in consumer spending.”