The growth in spending is being driven primarily by more and more people working and entertaining themselves at home.
The last number of weeks and months have been rather unrelenting when it comes to bad news, and the summer we got didn’t really help, or should I say, lack thereof.
New spending data from Revolut, however, is a chink of light in the seemingly never-ending gloom of a post-Covid world.
Analysis of Revolut’s latest monthly spending data has revealed that things may finally be on the up, with day-to-day spending now back above August 2019 levels.
So what does this mean for the economy and most of all, your finances? We take a closer look at the news below.
The data in detail
Revolut’s monthly spending data for August has revealed that day-to-day spending has risen year-on-year for the first time since Ireland went into lockdown back in March.
Combined spending of Revolut users in Ireland in August 2020 was up by a total of 4% in comparison to the same month in 2019.
Revolut currently has over 1 million customers in Ireland, and growing.
While the high-frequency spending data points to a strong recovery in consumer spending and bodes well for economic recovery, there are a number of sectors which are driving the growth.
Digital goods
Revolut’s results for this month reveal that the spending recovery is being driven predominantly by an “explosive” surge in spend on digital goods which include the likes of games, movies, books, and so on. In other words, things to keep us occupied with while continuing to maintain social distancing.
Spending on digital content is up 155% year-on-year, up 152% on apps, and 140% on games.
Equally aiding the recovery, according to Revolut, is people dickying up the house, to borrow a phrase, with an increase in spending on all things home care.
Garden centres (+102%), hardware stores (+91%), furniture stores (+60%), and appliance shops (+12%) all experienced increased business year-on-year.
Spending on pets is also 92% above the same time last year.
Hospitality behind, but rebounding
In encouraging news, Revolut data revealed that Irish people seem to be largely abiding by recommendations to vacation in Ireland this year, with spending on airlines down by 64% in August compared to the same time last year.
July’s year-on-year figures are a positive sign that Ireland’s hospitality sector is witnessing a well-needed boost, with spending by Revolut’s Irish users up in restaurants (+19%), hotels (+37%), and in museums & tourist attractions (+29%). The use of taxis was also up by 26% compared to July 2019.
That being said, year-on-year figures for August weren’t as encouraging, with the sector still suffering significantly compared to last year’s figures.
When compared to figures for August 2019, spending in restaurants is still down by 33%, in hotels down 12%, and in museums & tourist attractions is down by 27%. And year-on-year, taxi use was still down by almost half at 48%.
Spending in other areas of the economy
Revolut’s monthly spending data also highlighted other impacted areas of the economy with spend in cinemas experiencing a 75% rise year-on-year in July, however, spend by users is still 68% lower than in August of last year.
Interestingly, the game of golf experienced somewhat of a 'domestic boom' according to Revolut, with spending by Revolut users at golf courses up by a whopping 85% this August year-on-year.
About the latest data released by Revolut, Professor of Economics at Trinity College Dublin, Dr Paul Scanlon said they pointed to ‘at least some return to normalcy.’
“The 4% increase in spending from August 2019, despite significantly greater economic uncertainty and ongoing restrictions on the hospitality sector, highlights the resilience of the Irish consumer.”
Despite this welcome news, the expenditure breakdown raises some questions about sustainability. A large component of the spending comprises durable goods - such as appliances and furniture - that are unlikely to generate repeat purchases. Furthermore, some of the spending possibly reflects consumers reallocating holiday funds to big-ticket purchases at home.
Mirroring the expenditure shift from restaurants to grocery stores earlier in the year, the shift in spending toward home entertainment goods is striking, and is partly a counterpart to the 68% fall in cinema spending from a year earlier. Should it continue, this trend has significant implications for the allocation of economic activity, and future reports should shed more light on the long-run trend.
Dr Scanlon added:
Yet the pronounced monthly expenditure rises on restaurants, hotels, and taxis - where many of the year-to-year declines are concentrated - suggests that people are increasingly learning to live with the virus. While still tentative, this development augurs well for the economy.”
Switch and save today
Are you looking to save money on your everyday banking costs? Consider switching your current account provider today.
What’s more, it’s very easy to do. Take a look at our guide on how to switch your current account to find out just how easy it is.
Revolut and N26 are undoubtedly two of the most popular digital banks at the moment. We recently did a thorough comparison and review of both, which may be of interest to those looking to find the right digital bank. Alternatively, you can listen to our podcast episode on N26 versus Revolut here.
We also discussed both fintechs in another recent episode of our bonkers.ie podcast, Current accounts: a deep dive.
You can compare current accounts today with our easy-to-use current account comparison tool.
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Let’s hear from you
Have you noticed a change in your spending habits since the start of the pandemic? We’d love to hear from you in the comments below.
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