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First Data: Summer travel boosts July spending

Retail spending growth was at an 11-month high in July and consumers turned to planes, trains and automobiles as summer vacation travel led strong spending during the month, according to data reported today by First Data Corporation, a leading global payment technology and services company.

The First Data SpendTrend analysis looked at the period from July 1 through July 31, compared to the period from July 2 through August 1 last year. SpendTrend tracks same-store point-of-sale data by credit, signature debit, PIN debit, EBT, closed-loop prepaid cards and checks from nearly 4 million merchant locations serviced by First Data in the U.S.

Overall retail spending growth was at its strongest levels in a year as nearly all retail categories turned in improved numbers. Led by categories such as building material and garden equipment and furniture and home furnishings, the growth suggests the impact of fewer foreclosures and increased construction. Still, consumers remained hesitant to make big ticket and non-essential purchases.

July’s dollar volume growth of 3.9% was robust, marking an improvement over June’s growth of 3%. A year-over-year spending uptick was driven by hotel and travel categories, where dollar volume growth was 7.9% and 4.6%, respectively, as travelers went on holiday around the globe. Positive growth at food and beverage stores, at 5.3% and in the food services and drinking places category, at 4.4%, also contributed to July’s growth.

All regions across the U.S. saw positive dollar volume growth and, with the exception of New England, all regions experienced stronger sequential spending growth. Spending growth of 5.5% and 4.3% in the Midwest and West regions remained strong, up from June’s growth of 3.9% and 3.2%. The Midwest region saw the strongest spending growth, possibly due to nonfarm employment increasing faster in the Midwest than in other regions.

July’s average ticket growth of 1.5% (vs. 0.9% in June) was the strongest monthly growth all year, supported by average ticket growth in categories such as Food and Beverage stores, which saw growth of 2%. Retail average ticket growth of 0.4% in July was a slight increase from June’s negative growth of -.2% as fewer retailers engaged in clearance promotions.

“It is also notable that both credit spending growth, which was 6.2% in July, and credit transaction growth, at 7.5% this month, were up significantly over June growth results,” said Krish Mantripragada, SVP, information and analytics solutions, First Data. “That growth was driven by the categories we’ve detailed in this report, where credit is the preferred method of payment. Consumers are once again motivated to travel, while those who opted for ‘staycations’ increased spending in home-related categories. Looking ahead, we anticipate August’s back-to-school sales and state tax-free holidays should spur spending growth in related categories.”
 

 

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