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Consumer spending rises strongly in July as Brits spend more on holidays, dining out and entertainment

Visa Europe | Visa

4 min read Partner content

- Consumer spending rises +1.9% on the year in July, up from an annual increase of +1.4% in June - Growth led by Hotels Restaurants (+8.6%) and a near-record rise in Recreation Culture (+5.6%) - Online retailers continue to record marked rise in spending (+6.3%)

The latest Visa Europe: UK Expenditure Index data signalled a further solid increase in spending at the start of the third quarter. On an annual basis, expenditure increased +1.9% in July, up from +1.4% in June, and stronger than the average growth rate seen over the first half of 2015.

Hotels, Restaurants and Bars registered the steepest increase in spending in July (+8.6% on the year). Recreation Culture (which includes cinemas and theme parks) also saw marked growth in July (+5.6%) that was only slightly below June's record high (+5.7%). Misc. Goods Services (which includes hairdressing and jewellery) (+5.1%) and Household Goods (+2.0%) also saw strong increases in expenditure. Food Drink retailers meanwhile saw a slight rise in spending (+0.4%), following a reduction in June.

In contrast, spending volumes continued to decline in Clothing Footwear categories, though only slightly (-0.6%).

Online retailers saw a further marked rise in expenditure in July (+6.3% on the year) that was down only slightly from June's 18-month high (+6.7%). Face-to-Face categories also registered increased spending (+1.4%).

Kevin Jenkins, UK Ireland Managing Director Visa Europe said:

“Consumer spending rose strongly in July, following a record performance in the second quarter of the year. With the holiday season in full swing, Brits spending on leisure activities for the family, dinners and nights out were behind the rise.

“The high street, following a muted performance in June, has seen a bounce back too, perhaps in part due to July’s warm weather.

“Looking forward, it will be interesting to see how consumers react to the possibility of interest rate increases looming on the horizon. The overall outlook for consumer spending remains positive rather than excessive, with low inflation and a pick-up in wages continuing to put money into the pocket of consumers.”

Annabel Fiddes, Economist at Markit said:

“Household spending continued to increase at a solid clip at the start of the third quarter, with the latest Visa Europe: UK Expenditure Index pointing to a +1.9% annual increase in expenditure, up from +1.4% in June. Spending volumes were likely to have been boosted by improving economic fundamentals, with unemployment remaining at a historically low level and subdued inflationary pressures helping to boost real wages. Sector data highlight divergent trends, however, with spending rising markedly on days out and at hotels and restaurants, while expenditure rose only slightly in food drink categories and continued to fall at clothing footwear retailers.”

What UK businesses are saying:

Visa is tracking the sentiment of several small businesses across the UK on a monthly basis, asking about their views on the economy, business conditions and forecasts for the month ahead.

Wendy Dalton, Blush Boutique, Oldham
“Although July is usually a quieter period for us, last month we saw a surge in sales. Some days we took the number of orders we’d expect in a week. Customers were also less hesitant to go for the most expensive bridal dresses. Across our shopping village the atmosphere is very positive too as customers seem to have more money to spend.”

Quan Nguyen, Chi Café, London
“July’s sales were up on last year. We’ve seen more customers coming through our doors and people seem willing to spend more. At the same time, we are facing more competition, as there have been a couple of new café and restaurants opening in the local area in the past months.”

Tony Bailey, Top Notch Hair Beauty, Manchester
“July’s revenue was slightly down on last year. Many of our customers were away on holiday. And those that came through our doors seemed to spend less, in order to save towards their next holidays or to recover from recent ones. But as the holiday season comes to a close we expect that trade will pick up.”

Read the most recent article written by Visa Europe - Latest spending figures show record highs


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