Spending Sees Another Increase in May Driven by Strong Population Growth
Index of Consumer Spending
The Index of Consumer Spending (ICS) increased to 120.6 points in May, an 8.2-point increase from April (April 2022 = 100)
- 12 of 13 provinces and territories saw increases in their ICS scores in May. Prince Edward Island had the biggest change, improving 18.2 points to 139.8. Quebec and Nova Scotia followed with gains of 13.3 points (up to 139.2) and 13.0 points (up to 138.2), respectively. Nunavut (the only negative province) dropped from 108.0 to 101.8 points.
- Estimates from Signal49 Research for retail sales in Canada indicate that sales will increase by over $4 billion in Q2 2024 compared to Q1.
- Total household disposable income in Canada has steadily increased each quarter since the start of 2023. This appears to be a continuing trend, with household disposable income increasing by 1.8 per cent in Q1 2024.
- Strong population growth is driving the increase in total disposable income. Early population estimates from Statistics Canada for Q2 2024’s population show that Canada gained over 240,000 residents over this time.
- Households are turning more to savings, increasing the household saving rate from 6.2 per cent in Q4 2023 to 6.9 per cent in Q1 2024.
- Employment had a minor increase of 27,000 jobs in May (compared to 90,000 jobs in April). Despite this, the unemployment rate increased by 0.1 percentage points to 6.2 per cent, signalling that the labour force is growing at a faster rate than labour demand.
- Average hourly wage growth and total hours worked were flat from April to May as the labour force shifted away from full-time employment (-36,000) toward part-time employment (+62,000).
- Inflation is continuing to ease. In April, CPI on a year-over-year basis fell to 2.7 per cent (down by 0.2 percentage points from March).
- As inflation continues to drop, the Bank of Canada is expected to cut its interest rates further, which will make durable goods easier to finance. This will support consumer spending over the next couple of years.
12 of 13 provinces and territories saw increases in their ICS scores in May.
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.