Consumers spent slightly less in June than they did in May, but compared to last year spending is on the upswing.
First Data’s monthly SpendTrend analysis looks at payment patterns and consumer behavior, tracking spending at close to four million merchants across the United States. They look at consumers’ favored methods of payment including credit, debit, EBT, prepaid cards and personal checks.
The latest report compares spending at the same stores from May 31 to June 30, 2014, as well as a year-over-year comparison. While spending this June was slower than it was in May 2014, it grew 3% overall when compared to June 2013. Travel and hotel spending was strong, as people went on summer vacations. Travel spending increased 4.9% over last year, with hotel spending up 7.1%.
Inflation leads to increased spending
Food and beverage stores also showed increased spending of 4.7% more than last year. In May 2014, food and beverage sales were up 4.2% over the previous May. However, analysts attribute this increased spending to higher food costs, rather than people buying more food.
Building and gardening spending was significantly higher than what was spent on home furnishings (with 5.7% growth compared to 1.5% growth), reflecting the seasonal push toward outdoor home improvement rather than sprucing up interiors.
Credit is preferred payment method
Looking at how people paid for their purchases, credit cards reigned supreme in June. Credit spending was up 5.3% in transaction growth and dollar volume was up 3.9%. First Data attributed this to the increase in hotel and travel spending, as people primarily use credit cards to pay for travel and hotels.
“This month’s trends showed some slowing in spending growth but overall, spending remains healthy, reflecting the recovering economy and consumer willingness to spend compared to the same time last year,” said Krish Mantripragada, senior vice president of information and analytics at First Data.
Krish said that increase credit usage means that consumers have good access to credit, reflecting folks with better credit and more confidence that they will be able to pay off debt.
Payment method growth overall
Year-over-year, personal checks are the only payment methods experiencing declining popularity. Comparing June 2013 to June 2014, here’s how payment method growth stacked up:
- Credit +3.9%
- Signature debit +2.0%
- PIN debit +3.3%
- Check -1.2%
- Prepaid card +4.0%