Households March Forward With Spending Increases
Index of Consumer Spending
The Index of Consumer Spending averaged 91.3 points in April, an increase of 1.8 points from last month’s average (the week of April 10, 2022 = 100).
- Despite falling slightly in the first week of April, the index grew steadily throughout the rest of the month. The weeks of April 9, 16, and 23 added 1.2, 3.7, and 0.4 points to the index, respectively. The index’s value in the final week of April was 93.8, a slight change in trajectory from its general downward trend that began at the start of 2023. Data on the ICS are available from the week of April 10, 2022, to the week of April 23, 2023.
- This month, every region’s consumer spending index increased from last month’s scores. Alberta led the pack with an increase of 4.3 points in its monthly average. The lowest increase was in Quebec, at 0.5 points. The general increase could indicate that people believe influences on financial burdens such as interest rate hikes have peaked, allowing them to commit more toward purchasing rather than saving.
- According to our Index of Consumer Confidence (ICC), households’ confidence had modest growth in April, thanks to their improved outlooks on future job prospects and major purchases. This could explain some of the increases in spending we saw for April—some individuals may have begun to relax their frugal behaviours as they expect to start a new job or for the search to become easier, therefore needing less in savings to sustain themselves throughout the job-finding process.
- Inflation remains an ongoing concern around spending. In April, year- over- year inflation, as measured by the consumer price index, was at 4.4 per cent, still well above the Bank of Canada’s inflation target of 2 per cent. Another possible concern for consumer spending may be households’ proportion of disposable income. Many families are expected to see changes in their household payments in the coming months and even years. As highlighted in the Bank of Canada’s Financial Systems Review—2023, by the end of 2023, almost 50 per cent of all mortgages will have been subject to a payment increase. If households are dealing with higher mortgage costs, they may have to trim their spending on discretionary goods and services.
Alberta
The index averaged 96.0 points in April, its highest point since January.
Alberta’s index recorded the largest average change among all regions this month, growing from 91.7 to 96.0—a 4.3-point bump. The ICS saw Alberta record strictly positive increases for the month of April. The week of April 2 brought in an increase of 0.5 points to bring the index to 92.3. Following in kind, the weeks of April 9, 16, and 23 brought the index to 93.7, 98.5, and 99.5 to end the month.
Atlantic Provinces
The index averaged 102.5 points in April, 2 points higher than March.
Going into April, the region continued to grow on the week of March 26’s index of 100.5 points, increasing to 100.6 in the first week. The following two weeks added to this, bringing the index to 101.7 during the week of April 9 and 103.9 during the week of April 16. The month capped off with a slight decline to 103.8 for the week of April 23. Overall, the month saw strong positive movement in consumer spending, which coincides with the region’s April increases in consumer confidence.
British Columbia
The index grew to 89.5 points in April but remains lower year- over-year.
Barring the week of April 2, British Columbia posted growth in every week this month. April 2 saw a slight drop from the week of March 26, from 88.5 to 87.6. The week of April 9, however, came in at 88.2, the week of April 16 at 90.7, and the final week of April came in at 91.3. Despite the growth, British Columbia’s April index still sits at its second-lowest score in the last 12 months, only in front of March’s average of 88.9.
Ontario
The index averaged 86.4 points in April, up from 84.7 in March.
April began with a slight drop in its index, falling 0.3 points from the week of March 26. Despite this, the following weeks brought increases. The week of April 9 brought an increase of 1.8 points, bringing the index to 84.7. Similarly, the week of April 16 came with its own increase—a commendable 4.5-point jump, boosting the index to 89.2. However, the final week of April tempered the province’s rally, as the index lost 0.2 points to end the month at 89.0.
Quebec
Bouncing back slightly from last month’s decline, April’s index reached 90.7 points.
This month saw a slight reversion for Quebec, as the province’s index averaged 0.5 points higher than the previous month. The week of April 2 started the month off well, rising from 89.0 the week prior to 89.9. By the week of April 9, however, the index had dropped to 87.5 to create a turbulent first half to the month. The back half of the month was positive, though, with two weeks of increases. The index rose to 90.9 the week of April 16 and then to 94.4 to end the month. One factor possibly contributing to the rise is Quebec’s 2023–24 budget, which was released in late March. The budget included initiatives such as tax cuts, which could have influenced consumer’s outlooks of their future finances, leading to increased spending. Despite this, the index of consumer spending in Quebec remains at one of its lowest points to date, well below its value this time last year of 98.6.
Manitoba–Saskatchewan
The index averaged 107.4 points in April.
Like other regions, the Manitoba–Saskatchewan region saw its monthly average grow from March to April, rising 4.1 points from 103.3 to 107.4. Although increasing, April had large swings from week to week, starting with a decrease from March’s final week. However, the subsequent week of April 9 had this month’s largest weekly change among all regions, jumping from 100.7 to 109.6. The index grew even further the week of April 16, bringing the index to 112.5 points, only to finish the month with a drop of 5.9 points to drag the index down to 106.6. Our Index of Consumer Confidence for April echoes the general positive movement we saw in April’s consumer spending index. Consumer confidence within the region had positive increases for outlooks on current finances, future finances, major purchases, and future job prospects.
Territories
The index averaged 101.3 points in April, representing a 1.5-point increase from March.
Like Alberta, the territories saw strictly positive results week over week. The month began with a slight increase of 0.7 points in the week of April 2, followed closely by small incremental changes. The week of April 9 brought the index to 100.3, and the weeks of April 16 and 23 bumped it up further to 102.4 and 103.9. With these increases, the territories’ index rose to the second highest among all regions for the week of April 23, only behind Manitoba–Saskatchewan’s April 23 score of 106.6.
This month, every region’s consumer spending index increased from last month’s scores.
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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.