Consumers opened their wallets in June, but did so more slowly and not as widely as they did in May, payments processor First Data Corp reported Monday.
First Data issues its monthly SpendTrend Report on consumers' use of payment methods. The report tracks same-store point-of-sale data by credit, signature debit, PIN debit, EBT, closed-loop prepaid cards and checks from nearly four million merchant locations serviced by the processor.
“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,” Krish Mantripragada, First Data senior vice president said. “An increase in credit usage reflects steady growth in credit lending, improved consumer credit quality and a growing consumer confidence in their personal finances.”
First Data attributed the June spending to a slowly improving economy and growing job market. The report observed that spending slowed slightly from May but remained positive on a year-over-year basis, with a growth of 3.0%. Travel and hotel spending slowed from the previous month, but growth was still strong in these sectors, with year-over-year increases of 4.9% and 7.1%, respectively. Food and beverage store spending was up 4.7% compared to May's 4.2% growth, a trend reflecting an increase in food costs, First Data said.
Retail spending slowed a bit in June compared to May but remained positive with 1.2% growth. Building growth and gardening material spending rose 5.7% and furniture and home furnishing sales grew 1.5%, indicating continued improvement in the housing market.
However, a slowly declining unemployment rate caused consumers to remain hesitant and kept overall retail spending growth moderate, First Data said.
First Data also found credit spending continued to be the preferred spending method in June with a 5.3% increase in transaction growth and a 3.9% dollar volume growth, driven in part by the increased spending in hotel and travel where credit cards are predominantly used.
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