RBC is just out with its latest Canadian consumer spending tracker, based on its card data. I’ve found this report to be a good leading indicator for the retail sales report. The next edition is due on September 24.
RBC said spending remained on a positive trajectory with growth broadening across major spending categories. Core sales rose 1.1% m/m, 0.6% m/m on a three-month average and 6.6% y/y (nominally).
“Discretionary services continued to lead spending growth, supported by solid gains in travel, entertainment and arts,” RBC said. “Discretionary goods spending also improved, while essentials spending remained firm, although gasoline continued to account for an outsized share of the increase.”
This chart makes a compelling case that travel, entertainment and art are major drivers of spending. I suspect that mirrors the high wealth concentration among Boomers, who are seeing waves of retirements.
A contrast to this report is the latest NielsenIQ Omnishopper update via Scotiabank. It highlights a clear deceleration in spending in Canada and the US. They peg Canadian consumer goods spending up 4.5% y/y, a big contrast with the +6.6% discretionary goods number from RBC. A possible reconciliation is that RBC cards skew more wealthy, though I’d assume the reports try to adjust for that.
NielsenIQ Omnishopper data:
Looking further ahead, Scotia forecasts real consumer spending growth up 2.3% this year but falling to 1.8% in 2027.
This article was written by Adam Button at investinglive.com.