Skip to main content

Consumer spending continues to upward trend

Fast food and home furnishings make the biggest gains
11/1/2016

Consumer spending in Canada grew 4.77% in the third quarter of 2016 compared to the same period last year, driven by spending at restaurants and retail during the summer months, according to Moneris Solutions Corporation.

The report, which measures credit and debit card spending, states that with the exception of Alberta, all provinces showed positive spending increases in the third quarter. P.E.I. (7.8%), B.C. (7.1%) and Quebec (6.9%) were among the provinces posting the highest growth. This marks the fourth consecutive quarter of spending decreases in Alberta, with a drop of 2.66% year over year.

“It is a little off the 6%-ish that we’ve been seeing for the last number of quarters, and I think that reflects Alberta, Saskatchewan and Newfoundland, which were all either negative or flat in the quarter,” said Rob Cameron, chief product and marketing officer at Moneris. “We’re starting to see more of the impact of the low oil and the knock-on effect on the economies of certain provinces.”

With the low Canadian dollar, spending on payment cards from outside Canada increased 13% over the same period last year. Spending on U.S. credit cards remained the biggest driver of foreign spending, with an increase of 12.6% year over year. The United Kingdom (10.9%) and China (9.8%) were the second and third highest contributors to foreign spending growth during the quarter.

By category, the biggest increases were seen in fast food (12.2%), furniture and home furnishings (8.2%) and sports apparel (7.8%). “In the provinces where spending was up, we saw people spending more money in categories like home furnishings and restaurants and entertainment, which are more discretionary spends, so it indicates consumer confidence,” said Cameron. “But, if you look at those same categories in Alberta, those are some of the categories with the greatest reductions… so it’s clear there isn’t the confidence.”

The share of spending on credit cards continued to outpace debit cards in the third quarter. Spending on credit cards increased by 6.6%, representing a 65% share of transactions. Spending on debit cards rose by 1.6%, representing a 35% share of transactions.

Cameron believes spending on credit cards comes down to Canadians loving their loyalty points, and the fact you can pay later. “But, there was still growth in both categories, so I don’t think it was a tremendously negative story for ,” he said.

Canadians continued to make more payments by tapping their cards and smartphones. Contactless purchases made up 32.8% of all transactions during the quarter and the number of contactless transactions increased by 85% compared to the third quarter last year.

“In 2014, a tap transaction was one in 10. In 2015, it moved to one in five. And in 2016, as of the third quarter, one in three transactions were tapped,” said Cameron. “So it’s really become ubiquitous.”

This article first appeared on MarketingMag.ca

X
This ad will auto-close in 10 seconds