RBC credit card transactions show a second consecutive increase in real retail spending per person (excluding auto) in the first quarter. The latest data shows a recovery after eight consecutive declines, but it’s not all good news since spending on goods in March, particularly on furniture and clothing, was weak. This contrasted with increased spending on services.
“RBC’s March consumer spending data suggests Canadian household spending is still stalled (on a per person basis), but there are early signs of a thaw,” RBC writes. “We expect Canadian consumer spending to remain weak in the first half of this year before recovering in the second half.”
Much of the increased spending was on groceries and gasoline, while car purchases continue to decline due to high interest rates.
Discretionary spending on services increased for the sixth consecutive quarter and spending on restaurants and hotels saw a nice increase in March.
Overall, I don’t see any good signs for Canada, but the spring housing market performed much better than expected and I’m pretty confident we’ve bottomed out. On the contrary, I fear that the bidding wars will return.
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