Spending Turns Up in September and October
Index of Consumer Spending
In September, the Index of Consumer Spending (ICS) increased to 113.9 points—an improvement of 3.5 points from August (April 2022 = 100). October’s data showed further improvement, with the ICS increasing to 114.4 points.
- In September, all provinces but Prince Edward Island (PEI) had improved consumer spending. PEI—familiar with large swings in its ICS score—dropped 27.3 points to land at 151.2.
- October’s data, however, showed some moderation of scores across Canada. British Columbia, New Brunswick, Newfoundland and Labrador, Nunavut, Yukon, and PEI had lower scores. Nevertheless, the national ICS improved to 114.4 points, supported by increased spending in Ontario, Quebec, and Alberta.
- Lower consumer spending in the majority of the Atlantic provinces isn’t unexpected, although it came slightly later this year than it has in the past. Historically, spending in these provinces has withdrawn around September, partially due to the hurricane season. This year, with unexpected weather patterns shifting storms into October, the lower spending pattern has followed suit.
- Modest employment gains have helped spending. In September and October, jobs rose by 47,000 and 15,000, respectively. Additionally, the unemployment rate minorly improved in September, falling 0.1 percentage points. This drop was the first since January 2024. October’s unemployment rate showed no change.
- Regarding employment figures for September and October, employment of youth (ages 15 to 24) rose by 33,000 jobs in each month. This increase is notable for consumer spending, as youth possess some of the highest propensity to consume given changes to income among all age demographics.
- Inflation continues to trend downward. In September, Canada’s consumer price index (CPI) inflation eased to 1.6 per cent year over year—down from 2.0 per cent in August. October’s CPI inflation jumped back to 2.0 per cent year over year, but inflation remains comfortably around the Bank of Canada’s inflation target rate of 2.0 per cent.
- The Bank of Canada cut interest rates by 25 basis points in September and 50 basis points in October. These cuts will further support consumer spending growth. However, monetary policy has a lagged impact, meaning that these cuts will support spending gradually over the coming months rather than immediately.
- The Bank of Canada’s next interest rate announcement is scheduled for December 11, but the small jump in October’s inflation brings into question the size of another cut or whether another cut will happen. We forecast that the Bank will achieve its neutral rate of 2.75 per cent by the fourth quarter of next year.
Lower consumer spending in the majority of the Atlantic provinces isn’t unexpected, although it came slightly later this year than it has in the past.
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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.