National Household Spending Sees Back-to-Back Monthly Increases
Index of Consumer Spending
The Index of Consumer Spending (ICS) averaged 88.2 points in August, an increase of 0.3 points from last month (the week of April 10, 2022 = 100).
- The index rose from 85.7 points in the week of July 23 to 88.7 points in the week of July 30. This positive trajectory continued into the week of August 6, with the index reaching 90.6 points. However, during the week of August 13, the index declined to 87.6 points.
- Nationally, the monthly average current volume weakened by 1.5 points overall for August, indicating a small retreat in total nominal spending. However, year-over-year spending growth continues, albeit at a slower pace.
- All regions except Quebec saw notable increases in spending at the beginning of August. The civic holiday in many provinces on August 5 likely led some consumers to spend more while preparing to celebrate.
- A rash of wildfires has likely negatively affected spending. The Canadian Interagency Forest Fire Centre estimated that as of August 19, the country had seen almost 6,000 wildfires in 2023. In August, over 200 fires were burning in the Northwest Territories and almost 400 were burning in British Columbia. At the same time, B.C. saw drops in both its Index of Consumer Confidence and its ICS, while the Northwest Territories saw zero growth in its ICS and experienced a notable drop in year-over-year nominal spending volume during the week of August 13. The wildfires probably contributed significantly to these declines—affected residents likely reduced their discretionary spending to prepare for fire-related expenses, while those not directly impacted may have been affected by externalities like poor air quality that limited the ability to work or diminished business activity.
- Although national spending grew in August, consumer confidence across the country dropped to its second-lowest point since the beginning of the pandemic. We expect confidence to remain low for the short term as the effects of interest rate hikes mature and labour markets soften. If confidence remains low, consumer spending is likely to see little growth in the coming months.
Alberta
The index averaged 92.4 points in August, down from 92.9 in July.
Between the week of July 23 and the week of July 30, Alberta’s index quickly rose by 5.5 points to reach 94.2 points. The following week of August 6, the index increased by another 1.3 points before dropping to 91.4 points during the week of August 13. Likely connected to this decline is consumers’ future job prospects, which soured slightly in August. While the province’s unemployment rate dropped by 0.4 percentage points to 5.7 per cent in August, the Government of Alberta announced that starting August 3, the Alberta Utilities Commission would pause approvals for renewable projects over one megawatt until late February 2024. The pause likely led some consumers to spend less in August due to job and income concerns.
Atlantic region
The index averaged 100.9 points in August, up from 99.7 in July.
The region’s ICS fluctuated between the weeks of July 23 and August 13. The index increased steadily from 98.1 points during the week of July 23 to 103.5 points during the week of August 6. However, in the week of August 13, the index decreased 3.9 points to 99.6. In August, Nova Scotia’s unemployment rate fell by 0.7 percentage points, while Prince Edward Island’s rate fell by 0.5 percentage points. At the same time, the unemployment rate in New Brunswick rose by 1.5 percentage points, and Newfoundland and Labrador’s increased by 0.2 percentage points. In total, the region added net 200 jobs in August, leading to an increase in optimism about job prospects. In August, Newfoundland and Labrador also announced $2.7 million in investments in the tourism industry, with contributions from the province and the Atlantic Canada Opportunities Agency. This announcement, along with the news of job growth, likely contributed to an increase in consumer confidence and thereby consumer spending.
British Columbia
The index averaged 88.7 points in August, 1.2 points higher than in July.
From 85.8 points during the week of July 23, British Columbia’s index rose 4.4 points to 90.2 points during the week of July 30. During the following week, the index reached 91.3, an increase of 1.1 points. However, the index saw a minor decline during the week of August 13, settling at 87.6 points. During the week of August 13, British Columbia was facing hundreds of wildfires, which led to evacuation orders for thousands of residents. This state of emergency likely negatively impacted consumer spending.
Ontario
The index averaged 82.4 points in August, up from 80.3 in July.
Beginning July 23 at 80.2 points, the province’s index rose for three consecutive weeks to reach 84.4 points during the week of August 6 before dropping to 82.0 points during the week of August 13. While spending increased, so did unemployment, with over 29,000 more people unemployed in the province—an increase of 6.2 per cent from the month before. Although fewer Ontarians were employed, the population grew by 45,000, which helped offset the impact of job losses, allowing spending to increase for the month.
Quebec
The index dropped 2.0 points to average 87.8 points in August.
Quebec’s index fell from 87.7 points during the week of July 23 to 85.4 points during the week of July 30. The trend reversed the following week, with the index rising to 89.5 points during the week of August 6 before settling back down to 88.6 points during the week of August 13. In August, Quebec saw lower consumer confidence due in part to worse outlooks on current and future finances. This lower confidence was likely connected to heavy rainfalls in August that decreased crop yields in the province’s agriculture industry, thereby reducing farmer’s incomes, increasing prices for agriculture goods, and decreasing consumer demand.
Saskatchewan–Manitoba
The index fell a slight 0.2 points to average 102.5 points in August.
Like other provinces, the region’s index rose for three consecutive weeks, from 97.0 points during the week of July 23 to 106.8 points during the week of August 6. The following week, the index reversed course, dropping to 101.2 points. In August, the region saw unemployment increase significantly. From July to August in Saskatchewan, the number of unemployed people increased by 7.0 per cent, raising Saskatchewan’s unemployment rate by 0.3 percentage points to 5.4 per cent. Likewise, Manitoba’s number of unemployed people increased by 16.8 per cent, raising the province’s unemployment rate from 4.9 per cent to 5.7 per cent.
Territories
The index remained steady at an average of 99.1 points.
During the period of July 23 to August 13, the territories’ index saw large fluctuations. Beginning from the week of July 23’s score of 97.8, the index saw a notable increase of 5.5 points in the week of July 30 saw to reach 103.6 points. The following week, the index dropped slightly to 102.4 points. In the week of August 13, the index dropped 9.6 points to 92.8—the largest week-to-week change among all regions in August. That same week, the territories experienced significant wildfires, leading to states of emergency in each of the territories and the evacuation of over 20,000 Northwest Territories residents (over 60 per cent of its population). These emergencies likely considerably affected consumer spending in August.
All regions except Quebec saw notable increases in spending at the beginning of August.
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Canada’s Gross Domestic Product is largely made up of consumption. One way to gauge how the economy is performing is to look at how much Canadians are spending. Yet across the Canadian economic landscape, there is a lack of readily available consumer spending data. With that in mind, we created the Index of Consumer Spending for provinces and for Canada as a whole. This unique Index 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. This index is intended to inform senior policy makers how the country and the provinces are doing. Updates on this index will be released monthly.
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.