Household Spending Continues to Dwindle
Index of Consumer Spending
The Index of Consumer Spending (ICS) averaged 86.5 points in June, marking its lowest point since its inception (the week of April 10, 2022 = 100).
- Throughout the month of June, the ICS experienced a steady deterioration, commencing from 87.7 points in the final week of May. Subsequently, during the weeks of June 4, 11, and 18, the index further declined from its initial starting point. The first full week of June, June 4, saw the index decrease to 87.6 (a 0.1 point drop). The following week, June 11, experienced a more substantial decline to 85.6 (a 2.0 point drop). The final week measured, June 18, witnessed a further drop, bringing the index down to 84.9 (a 0.7 point drop).
- The decline in the Consumer Spending Index was observed across all regions, with the Territories experiencing the largest drop, losing 6.7 points. Following closely were Alberta and Manitoba–Saskatchewan, each losing 3.2 points, Ontario losing 2.8 points, British Columbia losing 2.3 points, Quebec losing 1.3 points, and finally, the Atlantic region losing 0.5 points.
- While the monthly average current volume showed some improvements in nominal spending across most regions, year-over-year nominal spending increases remained subdued. Manitoba–Saskatchewan witnessed the most significant increase in monthly average volume, rising by 7.9 points, followed by the Territories, and the Atlantic region with increases of 5.9 and 5.2 points, respectively. Ontario was the only region to experience a decrease, dropping 1.8 points.
- The weeks of June 11 and June 18 marked the first national declines in year-over-year volume growth for the ICS. This inversion indicates that consumers spent less during those weeks than they did during the corresponding period the previous year.
- Consumer confidence reached its lowest point this year in June, as evidenced by our index of consumer confidence, which dropped from 77.3 in May to 68.1 (a decrease of 9.2 points). British Columbia experienced the most significant drop in confidence among the regions, likely influenced by the recent port strikes. Interestingly, despite this decline, British Columbia’s ICS monthly average was only the fifth largest decline recorded this month.
Alberta
The index averaged 91.8 points, down from 94.9.
The beginning of the month showed promise, with the index adding 0.3 and 0.2 points in the weeks of June 4 and June 11, respectively, from May’s final score of 91.7. However, the week of June 18 resulted in a decline, settling the index at 91.2, 0.5 points lower than its starting score. Although all-item inflation in the region showed little change from May to June, growing by only 0.2 per cent, consumer confidence diminished significantly, with the Index of Consumer Confidence dropping by 10.5 points to a score of 38.8. This marked Alberta’s lowest consumer confidence level so far this year and likely contributed to the concurrent decline in its ICS.
Atlantic provinces
The index averaged 95.7 points, down from 96.3.
In the final week of May, the index stood at 96.9, and subsequent weeks in June (June 4 and June 11) continued to show a decline. The week of June 4 saw the index drop to 95.6, followed by a further drop to 95.0 in the week of June 11. The final week recorded in June, June 18, demonstrated some improvement, with the index climbing to 95.4. The drop in the index may have been influenced by unemployment, which showed mixed results for the region over June. Nova Scotia, New Brunswick, and PEI experienced increased unemployment, whereas Newfoundland saw a decrease. Although experiencing a rise in unemployment, PEI recorded the slowest rise in consumer inflation year-over-year in June, largely attributed to the 24.1 per cent decline in energy prices experienced in the province.
British Columbia
The index averaged 88.2 points, down from 90.5.
British Columbia’s index average dropped 2.3 points this month, following a trajectory similar to most other provinces. The final week of May saw the index increase to 89.1 points, but the week of June 11 resulted in a decline to 88.0 (a 1.1 point drop), and the final week of June 18 further dropped the index to 86.6 (a 1.4 point drop). The final score for the month was 86.6. The decline may be attributed to the port strike that began on June 1, which is expected to impact prices as the stock of goods becomes limited. As prices increase, some consumers may have been deterred from making purchases, thereby contributing to the drop in the ICS for the month.
Ontario
The index averaged 79.8 points, down from 82.6.
Like other regions, Ontario experienced several weeks of decline in the index. Starting from May’s final score of 81.7, the first week of June (June 4) saw a decrease to 81.3 points. Continuing the downward trend, the weeks of June 11 and June 18 further deteriorated the index, bringing it to 78.8 and 77.5, respectively, by the end of the month. Perhaps explaining the region’s lighter losses compared to the others is its consumer confidence resilience. In June, Ontario’s consumer confidence suffered a comparatively smaller loss among all regions, losing only 3.2 points. This decline in confidence was somewhat mitigated by small increases in proportions of individuals who believed their current and future finances would improve.
Quebec
The index averaged 86.0 points, down from 87.3.
Like last month, Quebec’s ICS exhibited fluctuation. The final week of May had the index at 86.7 points. The first full week of June (June 4) showed an increase to 87.2, but the subsequent week, June 11, experienced a decrease of 2.9 points, settling at 84.3 points. The final recorded week of June 18 saw a rise of 1.5 points, resulting in an index value of 85.8 points. The decline in Quebec’s index may partly be explained by the significant rise in unemployment in the region. From May to June, there was a percentage change of 10.6 per cent in unemployment, equivalent to approximately 19.7 thousand more unemployed individuals.
Manitoba–Saskatchewan
The index averaged 103.9 points, down from 107.1.
Following the pattern of other regions, Manitoba–Saskatchewan’s ICS experienced a decline, losing 3.2 points from last month’s average. In the final week of May, the index stood at 106.1 points. The weeks of June 4, 11, and 18 each contributed to the decline, with the index dropping by 0.1, 3.3, and 1.8 points, respectively, creating a total drop of 5.2 points from June’s starting point of 106.1. In this month, Manitoba and Saskatchewan’s unemployment levels experienced contrasting changes, counteracting each other’s effects. Manitoba’s unemployment decreased by 9.2 per cent from May to June, while Saskatchewan saw a rise of 9.0 per cent in its unemployment. Moreover, the region witnessed a decrease in consumer confidence, with the Index of Consumer Confidence falling by more than 10 points from May to June.
Territories
The index averaged 97.6 points, down from 104.2.
Experiencing the most significant decline among the regions, the Territories’ index average lost 6.6 points this month compared to the previous month. At the beginning of June, the index briefly climbed to triple digits, reaching 100.5 points and adding 1.6 points to May’s final week. However, the week of June 11 witnessed the largest weekly drop among regions, bringing the index to 95.6 (a 4.9 point drop). The final week of June 18 saw another decline, although less severe, dropping the index by 0.4 points to end at 95.2. The region’s ICS decline likely corresponds with sharp changes in unemployment. From May to June, the Yukon experienced an increase in unemployment of 42.9 per cent, driving its unemployment rate from 2.8 to 4.0. Meanwhile, Nunavut saw an increase of 16.7 per cent, bringing its unemployment rate up from 2.4 per cent in May to 2.8 per cent in June. Finally, the Northwest Territories also saw an increase in unemployment, albeit milder, rising by only 5.9 per cent to bring its unemployment rate up to 1.8 per cent from 1.7. Territories also saw an increase in unemployment although fairing much better rising only 5.9 per cent to bring its unemployment rate up to 1.8 per cent from 1.7.
Throughout the month of June, the ICS experienced a steady deterioration, commencing from 87.7 points in the final week of May.
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Canada’s Gross Domestic Product is largely made up of consumption. One way to gauge how the economy is performing is to look at how much Canadians are spending. Yet across the Canadian economic landscape, there is a lack of readily available consumer spending data. With that in mind, we created the Index of Consumer Spending for provinces and for Canada as a whole. This unique Index is powered by exclusive consumer transaction data provided by Moneris Data Services. Moneris is Canada’s number one payment processor with over 3.5 billion transactions spanning more than 325,000 merchant locations. This index is intended to inform senior policy makers how the country and the provinces are doing. Updates on this index will be released monthly.
Disclaimer: Forecasts and research often involve numerous assumptions and data sources and are subject to inherent risks and uncertainties. This information is not intended as specific investment, accounting, legal, or tax advice.