Consumers remained cautious in June, using their payments cards to spend just 6.8% more than they did during the same month last year. The growth in their spending activity also was down from the 9.2% rise in May compared with the same month in 2009, according to First Data’s SpendTrend report.

Card-transaction growth in June, at 7.3%, slowed for the third consecutive month, perhaps reflecting persistent high unemployment, an increase in personal savings, and the expiration of certain government-stimulus and benefit programs, the Atlanta-based processor noted in a news release.

Consumers are feeling the unemployment rate will be here for a while, so low-income consumers are spending less, Silvio Tavares, First Data senior vice president, tells PaymentsSource. And consumers with higher wages are putting their money into savings, resulting in relatively modest growth in consumer spending overall, he says.

Credit card transaction activity increased 0.1% in June, while signature-debit transaction volume rose 11.4% and PIN-debit purchases were up 10.4%, according to First Data, which did not provide specific transaction data.

The average sale from a payment card transaction fell 0.5% in June after posting positive year-over-year growth for four consecutive months.

Retailers posted their lowest sales growth for the year in June at 5.2%; May’s sales grew by 7.2% year over year.

The South was the worst-performing region last month, with sales-dollar growth of 3.8%, the second-lowest year-over-year growth rate for the region since October, as for the first time it began feeling the effects of the Gulf oil spill, Tavares says. Transaction growth of 5.5% in June also was the lowest growth rate in the region since May 2009.

The Midwest was the best-performing region, with sales-dollar growth of 10.3% in June.

Looking ahead, a decrease in the unemployment rate could spur future consumer-spending growth, Tavares says. “Corporations today have a lot of cash on their balance sheets and could hire if they wanted to,” he says. “If employers feel more confident about growth, they will be willing to hire.”

 

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