Propel Morning Briefing

Pubs and restaurants see double-digit growth in November as consumer spending falls in real terms for second consecutive month

Pubs and restaurants saw double-digit growth in November as consumer spending fell in real terms for the second consecutive month, according to new data.

The findings by Barclaycard, which sees almost half of the nation’s credit and debit card transactions, revealed consumer spending grew 2.8% year-on-year in November – below the annual rate of inflation of 3% and maintaining the muted levels seen throughout the second half of 2017.

Brits opted to spend on leisure time with friends and family as the nights drew in, helping pubs (11%) and restaurants (12.1%) return to levels seen earlier this year after a brief slowdown in the three months to October. This pushed up entertainment spending to 9.5%, its best performance since July.

Confidence in household finances fell from 64% to 56% month-on-month as inflation and the first interest rate rise in a decade weighed on sentiment.

Only 30% of consumers feel confident in the UK economy, down from 37% at the end of September. A gap of 30 percentage points now exists between those who are confident and those who are not – the second widest since Barclaycard began tracking consumer confidence in 2014.

In-store spending was down 0.1%, the seventh straight month in negative territory. Although online spending posted a double-digit increase of 10.8%, this was down from an August high of 15.7%, with November marking the third successive month in which growth in online spend has slowed.

Essential spending growth of 3% was broadly in line with October’s figure (2.9%). Growth in non-essentials, however, rebounded as consumers tweaked their allocation of spending on the “nice-to-haves”, rising 2.8% from 2.2%. Brits plan to continue spending conservatively, with a quarter (24%) indicating they are less willing to splash out on non-essential items because of the rate hike, and a third (32%) worried rising prices – such as food and drink – will force them to spend more on Christmas this year than they did in 2016.

Barclaycard managing director Paul Lockstone said: “Consumer sentiment has deteriorated over the past couple of months after a prolonged period of falling purchasing power. Against this backdrop, it’s not surprising consumers continue to spend conservatively, leading to a second successive month of contraction in real terms. While entertainment spend brought some welcome relief, growth on essentials outstripped expenditure on nice-to-haves for the third month in a row, indicating shoppers are prioritising carefully. Nevertheless, the search for value continues, with Brits seeking sales and discounts to make the most of their budget during the festive season.”

 

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