PSCU Payments Index July 2023: A Deep Dive into the Services Sector
Summary: The July 2023 edition of PSCU Payments Index finds improved consumer sentiment and renewed purchasing growth for both credit and debit. In June, credit card purchases rebounded with positive year-over-year growth, while debit card purchases posted similar upward gains. This month’s Deep Dive highlights the Services sector, including which of the varied merchant groupings contributed to making this sector the most impactful on the overall growth in purchases for June.
Subscribe to the Payments Index
*Visit our privacy policy to learn more about how we handle your data.
Key takeaways include:
- After a decline in May, year-over-year growth in credit purchases rebounded in June, finishing up 1.7%. Growth in debit purchases also grew, up 4.3% for June. Transaction growth for June continued to be stronger than growth in purchases, with credit up 4.1% and debit up 5.0%.
- For credit purchases, the largest contributor to growth continued to be the Services sector (1.3 percentage points of growth) while again offset by a reduction in Gasoline (1.4 percentage points). For debit purchases, the two sectors that generated the highest growth for June were Money Services, contributing 1.7 percentage points, and Restaurants, contributing 1.0 percentage point. Debit purchases were offset by a reduction of 1.8 percentage points in Gasoline.
- The Consumer Price Index (CPI-U) decreased on an annual basis from 4.0% to 3.0% in June, marking the lowest annual inflation rate since March 2021. Shelter accounted for over 70% of the all-items inflationary increase. The Fed has indicated that two additional rate increases in 2023 are likely.
- Purchase growth in the Services sector had the biggest impact in June for credit cards. While growth in most of the merchant categories in Services was marginally positive, the two common standout categories were Insurance and Medical/Healthcare. For the overall Services sector, growth in credit purchases was up 6.0% and debit purchases were up 6.6% for June with these top merchant categories contributing over half of the growth for the sector.
- Credit card non-discretionary spending also rebounded from the negative growth in May, finishing up 0.8% for June. Non-discretionary spending for debit cards was up 3.2%. Discretionary spending continues to grow at a greater rate than non-discretionary spending growth, with credit up 4.9% and debit up 12.2%.
Subscribe to our mailing list to receive the PSCU Payments Index delivered directly to your inbox each month.