Canadian spending growth cools in July

August 16, 2023

Advocacy

By Carrie Freestone, Economist at RBC

Canadian spending showed signs of slowing in July. While retail sales excluding autos continued to rise, the pace was slower than in June.
Spending on discretionary services slipped a bit in July. The early summer travel boom is losing momentum with both real and nominal spending slightly below March peak levels.
Though restaurant spending has increased, this largely reflects higher prices rather than additional restaurant visits.
Spending remains firm, but early signs of softening are consistent with a drift higher in the unemployment rate. As we progress into the second half of the year, real consumption is expected to retreat as household debt servicing ratios climb to record highs.

Canadians tighten their belts in July

3 month moving average % change in seasonally adjusted retail sales

Early signs of discretionary services spending pullback

Seasonally adjusted index (November 2022=100)

Restaurant spending still a priority in summer months

Seasonally adjusted index (Feb 2020=100)