Spending in July was down 2.4% on June and down 0.1% compared to this time last year.
Visa Europe’s
UK Expenditure Index, which takes card spending data and adjusts it for a variety of factors to create a like-for-like comparison of consumer spending.
Dr Stephanie Hare, Senior Analyst at Oxford Analyticasaid:
"The stronger-than-expected monthly services purchasing managers' index (PMI) rise when considered with other indicators such as improving busniness confidence, rising house prices and a strong second quarter performance, points to the possibility of continued growth in the third quarter.
"However the economy is still on track to register below-trend growth this year and faces continued headwinds, notably the fact that wages are not keeping pace with inflation and the government's cuts to benefits and tax credits will continue.
"The monthly services PMI rose from 56.9 in June to 60.2 in July, the seventh consecutive month of growth and the highest in over six years, according to Markit and the Chartered Institute of Purchasing and Supply today. This follows the announcement last month that the UK economy registered second quarter growth of 0.6% after growth of 0.3% in the first quarter, according to the preliminary data released by the Office of National Statistics."
Dr Steve Perry, Commercial Director at
Visa Europesaid:
“The impact of the weather is borne out in the breakdown of where UK consumers chose to spend their money in July.
“Recreation & Culture spending was down 5.4% as people perhaps took to the beaches and parks rather than theme parks and cinemas.
“Hotels and restaurants benefited with a 3.3% increase in spending on the year.”
Paul Smith, Senior Economist at Markitsaid the data shows the UK economy is “still in the embryonic stages of real recovery”.
“There will be an inevitable lag between positive business activity trends and meaningful growth in personal consumer spending taking hold, especially given the stagnation of wages and the erosion in real incomes of recent years,” he said.
“That said, the latest fall in household consumption was only the second of the year so far and heavily loaded to the start of the month, with declines in spending in the first fortnight of July following on from a stellar end to June. The good weather during the month may have also encouraged households to spend more time away from recreational activities such as trips to the cinema, theatre and museums.”
Vanessa Rossi, an economist from Oxford Analyticaadded:
"Regarding personal spending, credit card data are pointing to weaker consumer sales in early July after the boost in late June and modest growth prior to that. Weather factors also shifted business across sectors. The overall pattern of consumption this year is mildly positive in spite of the lack of real income growth for households. Consumer confidence, buoyed by rising employment and economic growth, along with low interest rates have probably encouraged a small fall in annual savings in 2013."
Overall, household spending may have weakened in July, but improved trends in consumer confidence (in July sentiment was at a three-year high), relatively stable spending growth for 2013 as a whole.