Red blood cells Outside From our monthly Canadian consumer spending tracker, the picture looks positive, with spending increasing in almost all categories.
Retail sales, excluding automobiles, saw significant growth during the month, driven largely by higher purchases related to homes, sporting goods and apparel. These trends point to a broader seasonal trend as Canadians prepare for summer, according to RBC's April spending tracker. This metric is based on the credit card data of Canada's largest bank.
They noted that spending in the home furnishings, renovation materials and garden supplies category saw its first notable increase in a year, while building materials accounted for nearly a third of the overall increase in spending in April. The other strength was in hotels and restaurants.
The only categories that saw declines were grocery, gasoline and miscellaneous goods.
Overall, RBC does not believe the strength in spending will continue:
RBC's April consumer spending data marked a stronger start to the second quarter than we expected. But one month does not make a trend. We are cautiously optimistic that consumer activity will improve this year – adjusting to higher interest rates will be less difficult for households in 2024. The question is: Will consumer optimism prevail in the summer? Headwinds in the labor market are increasing, with the unemployment rate up a full percentage point from last year and layoffs rising in recent months. Rising corporate insolvencies in the first quarter coupled with rising household credit default rates are adding to these headwinds. We still expect consumer spending to pick up in the latter half of the year once the Bank of Canada cuts kick in, likely in June
