RBC is out with its latest Canadian consumer spending tracker and the cardholder data from Canada's largest bank shows a worsening picture.
The report says Canadian consumers "are tapped out":
- Retail sales likely declined in September, both nominally and after inflation adjustment
- Q3 marks first quarter since early 2021 that services sector spending has weakened
- Per capita retail spending "nothing short of abysmal" - declined in 7 of past 9 quarters
- Overall sales buffered by rapid population expansion
Details:
- Saw a "significant pullback" in clothing and footwear spending after August back-to-school surge
- Car sales moderated after strong summer
- Essential spending (groceries, gas) weakened
- Dining out frequency decreased in August and September
- Travel spending provided some offset, but hotel spending was below year-ago levels
Comments in the report from Carrie Freestone:
Interest rates have been adjusted lower, but debt-servicing ratios are still high with households playing catch-up from previous rate hikes over the past two years. Interest rates are at high levels, and it will take some time before Canadian consumers feel a significant incentive to ramp up discretionary spending
The Bank of Canada meets next week and pricing is now at 81% for a 50 basis point rate cut.
