Consumer Spending Stabilizes Amid Mixed Regional Trends
Index of Consumer Spending
The Index of Consumer Spending (ICS) edged up to 116.8 points in October, a modest 0.6 per cent increase from September (April 2022 = 100). This slight improvement follows two months of decline, reflecting mixed regional performance and cautious household spending patterns.
- Quebec recorded the strongest gain in October, with the ICS rising 2.2 per cent, supported by higher retail activity in household goods and grocery categories. Ontario also posted a 0.9 per cent increase, driven by early holiday promotions and steady spending on groceries at supermarkets and traditional food retailers. These gains helped offset sharp declines in Prince Edward Island (-9.6 per cent) and Yukon (-9.1 per cent), where tourism-related spending fell back to typical levels after summer peaks.
- British Columbia and Newfoundland and Labrador saw ICS declines of 0.9 and 3.9 per cent, respectively. In both provinces, weaker demand for housing-related durable goods, such as furniture and appliances, and reduced discretionary spending contributed to the drop, as households faced elevated borrowing costs and prioritized essential over non-essential goods.
- Employment growth was flat in October, according to Statistics Canada, leaving the unemployment rate unchanged at 7.2 per cent. Job losses were concentrated among youth and part-time positions—groups that typically allocate a larger share of income to discretionary items such as dining and entertainment—helping explain weaker spending in these categories.
- Wage growth slowed to 2.1 per cent year-over-year, down from 2.4 per cent growth in September. Combined with stagnant hours worked, this limited income growth and constrained household budgets. With inflation still present, slower wage gains reduced the ability of consumers to maintain previous levels of discretionary spending.
- Headline CPI rose 0.2 per cent month-over-month, driven by modest increases in food and shelter costs. Higher grocery prices, particularly for meat and dairy, absorbed a greater share of household budgets, leaving less room for non-essential purchases. Seasonal declines in fresh produce offered limited relief, while shelter costs continued to climb, reinforcing pressure on disposable income.
- Gasoline prices fell by nearly 1.0 per cent, providing some relief on transportation costs. However, these savings were offset by higher utility bills and insurance premiums, which kept overall household expenses elevated. Electricity costs increased due to seasonal heating demands and higher rates in provinces where drought-impacted water reservoirs limited hydroelectric output and necessitated more expensive alternative energy sources.
- Retail sales volumes were stable nationally, but growth was concentrated in necessities such as food and personal care products. Sales of furniture, electronics, and other durable goods remained weak, reflecting households’ decisions to defer major purchases amid financial uncertainty and high borrowing costs.
- Consumer confidence showed little improvement in October, based on our Index of Consumer Confidence. Fewer than 10 per cent of respondents expected job prospects to improve, and sentiment around major purchases remained low. This lack of confidence contributed to restrained spending on discretionary items, even in provinces where the ICS posted gains.
- Housing-related spending softened further. Fewer housing starts reduced demand for big-ticket items such as appliances and furnishings, while elevated mortgage renewal costs continued to absorb disposable income. These factors limited household capacity to spend beyond essential goods and services.
- Seasonal influences were muted. Back-to-school spending had already tapered off, and holiday-related shopping had not yet accelerated. Categories such as apparel and electronics saw only marginal increases, while hospitality and travel spending declined in several provinces, reinforcing the overall cautious tone in consumer behaviour.
Housing-related spending softened further. Fewer housing starts reduced demand for big-ticket items such as appliances and furnishings, while elevated mortgage renewal costs continued to absorb disposable income.
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. The responsibility for the findings and conclusions of this research rests entirely with Signal49 Research.