TORONTO – ECONOMY – Consumer spending is up at least for now according to the Conference Board of Canada. “Canada’s gross domestic product is largely driven by consumption, and a reliable gauge for assessing how the economy is performing is to look at how Canadians are spending,” said Sohaib Shahid, Director of Economic Innovation at The Conference Board of Canada.
“Importantly, consumer spending is a leading indicator for future economic growth. Despite the importance of consumer activity, we saw a gap in readily available data on this, which is why with Moneris, we’re working to inform policy makers on the provincial and national economy,” adds Shahid.
The Conference Board of Canada in a media statement says, “Driven by warmer weather and a significant decrease in pandemic restrictions, Canadians are spending more on retail and travel services, according to The Conference Board of Canada’s new Index of Consumer Spending (ICS) which rose to 105.9 points in the first week of May”.
The ICS tracks weekly year-over-year changes in consumer spending, enabling it to gauge economic activity nationally and is powered by exclusive consumer transaction data provided by Moneris Solutions Corporation (‘Moneris’) Data Services; Canada’s most widely used payments processing company.
Consumers have been tapping into savings to keep pace with rising prices, with the low employment rate giving Canadians confidence to spend their money. However, The Bank of Canada’s overnight rate increases in April and June, as well as anticipated increases in the coming months will encourage consumers to save more and pull back on spending moving forward.
“We’re excited to play an important role in providing critical information on consumer spending and the overall Canadian economy,” said Sanjeev Chib, Managing Director of Spendscape, Moneris’ data solutions subsidiary. “Our industry-leading data and insights from point-of-sale activity combined with The Conference Board of Canada’s expertise will provide a coast-to-coast perspective on how the economy is trending.”
The highest across Canada, Atlantic Canada’s index soared 17.7 points between April 24th and May 7th to 115.2 points. Consumer spending decreased in this region during the week of April 17th. Still, it did not take long for consumer spending to recover. The ICS increased 7.9 points just a week later.
Ontario’s index rose three weeks in a row, reaching 111 points in the first week of May. In April, the unemployment rate was 5.4 per cent. Low unemployment contributed to the steady increase in consumer spending. Further, consumer price index (CPI) inflation was 6.9 per cent, implying that the increase in prices is also being captured in the ICS.
Despite declining during the week of April 17th, Quebec’s index gradually increased to 99.9 points in the first week of May. In March, Quebecers felt less confident about their financial situations due to inflation being at 6.8 per cent.
Alberta’s index reached 103.3 points during the week of May 1st, a significant recovery from the third week of April when it fell to 95 points. According to The Conference Board of Canada’s Index of Consumer Confidence (ICC), the decline in positive sentiment toward big purchases in March could have been a driving factor behind the 5 points decrease in the ICS.
British Columbia’s index during the first week of May reached 100.4 points. Despite this positivity, residents feel less optimistic about future job prospects, which explains the slow recovery in consumer spending while higher prices explain the increase in consumer spending.
The Saskatchewan-Manitoba index continued its increase to reach 108.7 points during the week of May 1st. Low unemployment in both provinces played a role in boosting consumer confidence, which contributed to an increase in spending.
After dropping 5.9 points during the week of April 17th, the index for the Territories only recovered to 95.7 points during the week of May 1st. Out of all the regions, the Territories saw the slowest increase in consumer spending. One factor could be the 9.5 per cent unemployment rate in Nunavut, a 3.3 per cent increase from April 2021.
The ICS data are available from the week of April 10th, 2022, to the week of May 1st, 2022, and the index will be published monthly. The research is available here.