Spending Rises, but Confidence Remains Low
Index of Consumer Spending
In May 2025, the Index of Consumer Spending rose to 119.8—an increase of 2.7 points from April (April 2022 = 100).
- In May 2025, the Index of Consumer Spending (ICS) increased across all provinces except British Columbia, where it remained effectively flat. The index for Prince Edward Island increased by the greatest margin (11.0 points), followed by Quebec (8.2 points). In the Northwest Territories and Nunavut, the indices decreased again this month, with declines of –4.8 and –4.2 points, respectively.
- Average hourly employee wage growth in May was 3.4 per cent (the same as in April). A softer labour market and slowing wage growth will constrain consumer spending growth over the coming months.
- Continued uncertainty continues to weigh on Canada’s consumer confidence. Of the consumers surveyed in May, only 5.3 per cent expected there to be more job opportunities in the next six months. Sentiment about current and future finances was also subdued, with just 10.7 and 14.8 per cent, respectively, viewing their circumstances positively.
- At its most recent meeting, the Bank of Canada cited trade unpredictability as a reason for holding rates unchanged. A slower interest rate easing cycle will delay the recovery of consumer confidence and likely weigh on discretionary spending growth over the near term.
- We expect nominal consumer spending to increase in the coming months as the impact of retaliatory tariffs is passed through to consumers via higher prices. Canadian imports in the first quarter of 2025 rose 5.2 per cent, indicating that some firms and consumers were attempting to get ahead of tariffs by stocking up on cheaper inventories. Firms using a first-in, first-out inventory accounting strategy will typically not confront higher goods costs until existing inventory is depleted—delaying the impact of tariffs on consumer goods.
- The unemployment rate in May ticked up 0.1 percentage points to 7.0 per cent to reach the highest level since September 2016 apart from the pandemic. Meanwhile, muted labour demand has left employment effectively unchanged since January.
- In the first quarter of 2025, job vacancies fell 3.8 per cent on the previous quarter. Weak hiring is restricting job growth and contributing to the upward drift of the unemployment rate. While lingering weak business confidence may continue to constrain labour demand, the emerging slowdown in population growth will cut into labour force growth and exert downward pressure on the unemployment rate over the medium term.
- The Canadian dollar continues to strengthen against the U.S. dollar. In May, the Canadian dollar’s conversion rose to 0.72 cents. A stronger Canadian dollar has a deflationary effect on the price of U.S. imported goods—softening the contribution of U.S. goods purchases to higher total consumer spending in May. However, consumers are still facing higher costs because of retaliatory tariffs.
The unemployment rate in May ticked up 0.1 percentage points to 7.0 per cent to reach the highest level since September 2016 apart from the pandemic.
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.