RBC is out with its latest Canadian consumer spending tracker and the cardholder data from Canada’s largest bank shows a worsening picture.
The report says Canadian consumers “are tapped out”:
Retail sales likely declined in September, both nominally and after inflation adjustmentQ3 marks first quarter since early 2021 that services sector spending has weakenedPer capita retail spending “nothing short of abysmal” – declined in 7 of past 9 quartersOverall sales buffered by rapid population expansion
Details:
Saw a “significant pullback” in clothing and footwear spending after August back-to-school surgeCar sales moderated after strong summerEssential spending (groceries, gas) weakenedDining out frequency decreased in August and SeptemberTravel spending provided some offset, but hotel spending was below year-ago levels
Comments in the report from Carrie Freestone:
Interest rates have been adjusted lower, but debt-servicing ratios are still high with households playing catch-up from previous rate hikes over the past two years. Interest rates are at high levels, and it will take some time before Canadian consumers feel a significant incentive to ramp up discretionary spending
The Bank of Canada meets next week and pricing is now at 81% for a 50 basis point rate cut.
This article was written by Adam Button at www.forexlive.com.
