Growth in spending slows in line with other Canadian economic indicators
January 19, 2017
Consumer spending in Canada grew by 4.19 per cent in the fourth quarter of 2016 on a year-over-year 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. 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 present in the Canadian economy.”
Angela Brown, President and CEO of Moneris.
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 GDP1, flat average weekly earnings2 and low growth in retail sales3, 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 percent, representing 36.2 per cent of transactions.
2016 Holiday Recap: Black Friday soars while Boxing Day loses its luster
Black Friday continued 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.
Low dollar continues to drive cross-border purchases
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.
China and Australia were the second and third highest contributors to foreign spending growth by volume during the quarter, with increases of 16.88 per cent and 24.04 per cent, respectively.
Contactless payments usage continues to climb
Contactless, or tap-and-pay, transactions remained a popular choice for Canadians during the fourth quarter of 2016, boasting a 120.73 per cent increase in dollar volume and a 73.74 per cent increase in total number of transactions compared to the fourth quarter of last year.
In terms of the share of transactions by payment method, contactless accounted for 35.48 per cent of all transactions made in Canada during the quarter, compared to 22.22 per cent during the same period in 2015. That number increased on Black Friday, when almost half (47.11 per cent) of all transactions were “tapped” transactions, up from 30.04 per cent in 2015.
Note to editors
Please see infographic for highlights, including top categories and spending by province.
MonerisMetrics is an insightful Canadian consumer spending indicator powered by Moneris. It provides information on consumer spending activity in Canada across a range of categories by analyzing credit and debit card transaction data. The percentages cited are derived from actual sales volumes — the dollar values of credit and debit card transactions being processed by Moneris merchants — compared with sales volumes from the prior year.
As one of North America's largest providers of payment processing solutions, Moneris offers credit, debit, wireless and online payment services for merchants in virtually every industry segment and processes more than three billion transactions, annually. Moneris offers electronic loyalty and stored-value gift card programs. With more than 350,000 merchant locations, Moneris provides the hardware, software and systems needed to improve business efficiency and manage payments. For more information please visit www.moneris.com.