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February spending snapshot: RBC Canadian cardholder spending showed modest improvement in February despite consumers continuing to cut back on discretionary goods spending.
Our core retail sales measure on a three-month average remained negative at -0.1%, but marked an improvement from -0.3% (seasonally adjusted), indicating the decline eased in February after weather-related disruptions and post-holiday fatigue weighed on spending in January.
We expect higher oil prices will drive up purchases at gas stations. The impact on other essentials and discretionary spending is less clear as it will depend on how consumers allocate their remaining income, and the extent to which they tap into their savings.
The details:
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February’s contraction came entirely from discretionary goods—clothing and related retail segments was among the weakest performers.
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Weakness in discretionary goods spending was partially offset by spending growth in discretionary services and essentials. Travel, entertainment and art posted the strongest gains on a three-month average, pointing to continued resilience in experience-related spending.
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Spending grew in most provinces on a three-month average following the January slowdown. Ontario, hit particularly hard by winter storms, showed notable recovery in February as conditions moderated.
About the Authors:
Rachel Battaglia is an economist at RBC, providing forecasts for the Canadian provincial economies and analyzing key trends in housing and consumer spending.
Abbey Xu is an economist at RBC. She is a member of the macroeconomic analysis group, focusing on macroeconomic forecasting models and providing timely analysis and updates on economic trends.
By Carrie Freestone
RBC’s consumer spending tracking report uses RBC Data & Analytics’ proprietary database of anonymized card transactions by Canadian clients. The data are an accounting of merchant transactions that are divided into various spending categories covering tens of millions of weekly card transactions worth billions of dollars each week. Transactions, both in person and online, are classified into 11 broad spending groups: Dining, Education, Finances, Groceries, Health, Household, Shopping, Transport, Travel, Utilities, and Other. Within each group, the data are further classified: for example, shopping covers merchants classified as clothing stores, hobby shops, electronics stores, and jewelers, among others. We exclude purely financial transactions such as cash advances and insurance from spending.
We examined changes in the value of all transactions in these areas using a 7 day rolling sample starting January 1st of each year that is indexed to pre-covid levels which are calculated as the average spending for the month of February 2020. To examine the impact of seasonal factors, we also show each’s year spending profile which depicts monthly trends in spending. Online spending volumes are estimated based on the presence of an RBC card at the time of the authorization.
Protecting your privacy and safeguarding your personal information is a cornerstone of our organizational ethics and values and will always be one of our highest priorities. The underlying data for this analysis was aggregated based on transaction date, region and merchant category, and cannot be used to identify any individual client or merchant. For additional information please visit www.rbc.com/privacy.
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