Canadian cardholder spending data “nothing short of abysmal” in latest RBC report

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.

This article was written by Adam Button at www.forexlive.com.