Growth in RBC Canadian cardholder spending held relatively stable in June as consumers continued to balance higher costs for essentials while selectively spending on seasonal experiences such as sporting events, according to an RBC report.
“Our estimate of core retail sales from cardholder transactions (excluding purchases of gasoline and autos) edged up 0.5% in June on a three-month average, similar to May, suggesting spending momentum remained positive despite ongoing budget pressures from higher energy prices,” said Abbey Xu and Rachel Battaglia, economists at RBC.
“Spending on discretionary goods led the way, posting the strongest gain among major categories on a three-month average. Essentials’ spending—including gasoline—also contributed to growth, while discretionary services rebounded after softening in May. Excluding gasoline, essential spending rose 0.5% on a three-month average, a welcome improvement after earlier signs of easing.
“The breadth of spending increases across categories points to households maintaining a cautiously optimistic view heading into the summer even as they remain selective about bigger-ticket discretionary purchases.”
The RBC report provided the following details:
- Gasoline spending continued to outpace other categories, rising 2.3% on a three-month average. Gas prices were still up on a three-month average due to higher oil prices, but declined about 10% seasonally adjusted in June.
- Entertainment and arts posted the second strongest gain at 1.7%, underscoring continued appetite for experience-related spending as summer activities pick up, including spending likely related to the FIFA World Cup.
- Spending on clothing extended its positive trend, while dining also increased 0.7%, reversing weakness from prior months as consumers grew more comfortable with meals out with the improving weather and social activity.
- Travel remained the outlier, continuing its decline on a three-month average, although the pace of contraction moderated in June. Households appear to remain cautious about larger discretionary purchases, but may be warming to travel deeper into summer.
- Provincial trends were broadly positive with most regions posting spending growth on a three-month average. Ontario and British Columbia tied for the strongest performance, while Saskatchewan and Prince Edward Island were the only provinces to see declines.
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