Consumer spending grows in Q4 of 2016

TORONTO — Consumer spending in Canada grew by 4.19 per cent in the fourth quarter of 2016 on a year-overyear basis, according to the MonerisMetrics Quarterly Report released by Moneris Solutions Corporation (“Moneris”), one of Canada’s largest processors of debit and credit payments.

Following spending growth of 6.24 per cent in Q1, 5.53 per cent in Q2 and 4.77 per cent in Q3, the percentage of growth continued to shrink in Q4, ending the year with a positive, but comparatively smaller increase.

“We observed increases in consumer spending throughout every quarter of 2016, but that growth declined slowly and steadily over the course of the year,” said Moneris president and CEO Angela Brown. “As we enter 2017, we expect a trend of modest growth to continue as Canadian policy-makers react to a changing global landscape and broader challenges in the country.”

Compared to 2015, consumer spending this year rose by 2.95 per cent in October, 5.34 per cent in November and 4.24 per cent in December. Regionally, Ontario and British Columbia led the country’s spending growth this quarter, posting increases of 6.24 per cent and 5.87 per cent, respectively. Spending was down 2.04 per cent year over year in Alberta, marking the fifth consecutive quarterly decrease for the province, while Newfoundland posted its first spending decrease since Q2 2014, declining 1.66 per cent over the same period in 2015.

The overall slowdown in consumer spending growth is consistent with other recent economic indicators, with Statistics Canada reporting a decline in Canada’s GDP flat average weekly earnings, and low growth in retail sales all during the October time period.

Share of spending during the fourth quarter was more heavily weighted toward credit cards. Credit card spending increased by 5.68 per cent, representing 63.8 per cent of transactions. Spending on debit cards rose by 1.67 per cent, representing 36.2 per cent of transactions.

Black Friday continues to gain momentum in Canada, with consumer spending up 5.91 per cent over 2015. By contrast, Boxing Day shopping was down 4.58 per cent year over year suggesting that Canadians are changing their holiday shopping patterns as Canadian retailers offer more Black Friday deals and discounts.

For the fourth year in a row, Dec. 23 was Canada’s busiest shopping day of the year with an increase of 11.32 per cent in the number of transactions processed over the previous year, followed by Black Friday and Boxing Day. However, Black Friday was the biggest day of 2016 in terms of overall sales volumes.

Spending on foreign cards increased 13.44 per cent year over year, with the low dollar continuing to provide tourists and cross-border shoppers with a reason to make purchases in Canada. As in other quarters, cards from the U.S. drove the highest foreign spending volumes during the period, with an increase of 13.77 per cent year over year.