Spending Is on the Mend Following Its Start of the Year Drop
Index of Consumer Spending
The Index of Consumer Spending (ICS) increased to 98.6 points in February, a 2.5‑point increase from January (the month of April 2022 = 100).
- Year-on-year, the ICS is sitting higher by 3.6 points.
- Only Ontario and Saskatchewan experienced declines in spending this month. Both have seen consecutive monthly declines—three months for Ontario and eight for Saskatchewan.
- The Bank of Canada’s 2024 Q1 survey of consumer expectations shows a greater number of renters are planning to purchase a home in the coming year compared to the average from the year prior. The increase in housing demand could restrain national consumer spending, with renters allocating more toward savings in preparation for taking on a mortgage.
- In February, our Index of Consumer Confidence reached its highest point since August 2023, in part due to increased optimism surrounding consumers’ finances. Playing a role in this optimism is undoubtedly cooling inflation. Year-over-year inflation for February came in at 2.8 per cent compared to 5.2 per cent the year prior. Further increases in confidence, particularly surrounding finances, would feasibly translate to greater consumer spending.
- We anticipate that consumer spending will not see any large improvements in the coming months. We expect domestic demand to continue to be impacted by the higher interest rates, especially as more fixed-rate loans renew at the higher rates.
- We forecast the first cut to the overnight interest rate will occur in June. This will likely provide some momentum for increased consumer spending.
Alberta
ICS improved 2.9 points.
Alberta’s February ICS had the province increasing from 97.4 to 100.3 points.
British Columbia
ICS increased 5.7 points.
British Columbia’s ICS rose to 98.3 points from 92.6 points the month prior.
Manitoba
ICS increased 1.2 points.
Manitoba’s February ICS rose to 101.7 points (up from 100.5 points).
New Brunswick
ICS increased 5.6 points.
New Brunswick’s February ICS increased from 98.6 to 104.2 points.
Newfoundland and Labrador
ICS increased 0.3 points.
Newfoundland and Labrador’s February ICS saw a minor increase from 98.7 to 99.0 points.
Northwest Territories
ICS leaped 13.4 points.
The Northwest Territories’ February ICS had a substantial increase to 115.5 points.
Nova Scotia
ICS rose 5.0 points.
Nova Scotia’s February ICS increased to 108.2 (down from 103.2 points).
Nunavut
ICS jumped 9.5 points.
Nunavut’s February ICS showed the territory increasing to 104.5 points and breaking its three-month streak of decline.
Ontario
ICS decreased 0.4 points.
Ontario’s February ICS had the province falling for a second month in a row, dipping to 91.6 points.
Prince Edward Island
ICS increased 3.4 points.
Prince Edward Island’s February ICS has the province rising to 101.4 points from 98.0 points in January.
Quebec
ICS rose 6.2 points.
Quebec’s February ICS was 113.1 points—substantially higher than last year’s February ICS of 99.6 points.
Saskatchewan
ICS had a small drop of 2.7 points.
Saskatchewan’s February ICS showed the province dropping to 87.2 points. This marks eight consecutive declines for the province.
Yukon
ICS increased 11.9 points.
Yukon’s February ICS increased from 95.5 points to 107.4 points, snapping its streak of six consecutive monthly declines.
Year-on-year, the ICS is sitting higher by 3.6 points.
Powered by Moneris Data Services
The Index of Consumer Spending 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. Our index tracks incremental changes in net transaction volume month-over-month from a set starting point (April 2022 = 100), enabling us to gauge economic activity levels across the country and provide insights into how the Canadian economy is performing coast to coast.
Updates on this index will be released monthly.
The Index of Consumer Spending’s (ICS) methodology has been revised for releases from January 2024 onwards. The ICS no longer tracks the weekly year-on-year changes in consumer spending. Instead, the ICS now tracks the incremental changes in net transaction volume month-over-month, from a set starting point (April 2022 = 100).
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.