Consumers Favour November Over December
Index of Consumer Spending
In November, the Index of Consumer Spending (ICS) increased to 117.5 points—an improvement of 3.1 points from October (April 2022 = 100). December’s ICS pulled back, dropping to 114.2 points.
- Canada’s largest consumer spending provinces (Ontario, Quebec, and British Columbia) saw increased spending in November. Meanwhile, a small decrease occurred in Alberta, as well as in Saskatchewan, Prince Edward Island, and the territories.
- Apart from P.E.I., consumer spending in the Atlantic provinces bounced back in November from October’s slump. This increase was not unexpected, as it followed the end of their hurricane season.
- December’s ICS, however, saw a reversal, with spending decreasing in almost all provinces and territories—notably, including the largest consumer spending provinces.
- A pullback in spending in December from November is consistent with consumer spending history, with this occurring each year since 2021. The heightened spending in November is attributed to the month having two of the largest annual sales events—Black Friday and Cyber Monday. Additionally, with cost-of-living concerns still prevalent, consumers are shifting holiday shopping from December to November in a bid to take advantage of the bargains from these sales events.
- Also contributing to the lower consumer spending total in December was the federal government’s GST/HST break, which lowered the total spending in nominal terms per unit for a variety of goods.
- Employment growth over both months was beneficial for household incomes. A higher ICS score in November follows a similar pattern as last year and is indicative a trend of consumers commencing holiday spending in November.
- In the Bank of Canada’s final interest rate announcement in 2024, rates were cut by 50 basis points. This should further support the growth of consumer spending. However, the impact of monetary policy takes time, and the effect of these latest cuts will be realized over the coming months.
- Domestically, Canada’s economy is in recovery mode. Inflation has reached its 2 per cent target and the labour market continues to create jobs. However, there are inflation risks on the horizon—most obviously, the prospect of a shifting trade relationship under the second Trump administration.
- We expect the Bank of Canada to make further rate cuts over the coming months en route to a neutral rate of 2.75 per cent by the end of 2025.
Employment growth over both months was beneficial for household incomes.
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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.