Canadian consumer spending is on the rise despite cooling economic growth.
This is according to RBC cardholder transactions.
Building on April’s momentum, tracking shows a 0.7 per cent month-over-month increase in retail sales in May. Excluding automobile sales, spending was firmer up 1.1 per cent.
Statistics Canada’s advance estimate for April’s retail sales (pre-tax excluding the impact from the removal of the consumer carbon tax) showed a 0.5 per cent month-over-month increase, consistent with the underlying strength RBC has seen in its own spending data.
Stripping out more volatile components like auto and gasoline spending, this measure climbed by 1.2 per cent, reports RBC, reflecting solid momentum in broader household purchases.
Discretionary services continued to lead with spending rising 1.2 per cent from April. Essentials followed closely, up 1.1 per cent, while discretionary goods posted a more modest gain of 0.5 per cent. Despite the slower momentum, all three categories remained in positive territory, pointing to continued underlying strength in household demand.
Within discretionary goods, the increase likely reflects promotional sales and shifting consumer demand heading into the summer season.
In contrast, building materials saw the sharpest pullback falling 1.5 per cent, aligning with broader signs of slowing housing-related activity.
Consumer spending increased in nearly all provinces in May, with notable strength in the Maritimes. Ontario, British Columbia and Quebec experienced slower growth in spending during the month, though all three provinces managed to maintain growth.
Household Net Worth Rises
Statistics Canada reports that households were wealthier in the first quarter of 2025, despite headwinds of economic uncertainty and volatile markets, as their net worth — the value of all assets minus all liabilities — increased $141.2 billion or 0.8 per cent to $17,599.8 billion. This marked a slowdown from the last quarter of 2024, when net worth expanded by one per cent, but was also the sixth consecutive quarter of growth. However, as of Q4 2024, the wealthiest 20 per cent of households held over two-thirds of financial assets and more than half of real estate.
Households’ financial assets increased 0.9 per cent in Q1 2025 to $10,920.4 billion despite weaker equity markets. This was also the sixth consecutive quarter in which financial assets reached a record high even as trade policy uncertainty roiled markets.
Weighing against asset gains, household financial liabilities, composed primarily of mortgage and non-mortgage debt, increased $13.7 billion or 0.4 per cent.
The household saving rate was down for a second consecutive quarter, declining to 5.7 per cent, as the rise in household spending outpaced disposable income gains.
The value of residential real estate posted tepid growth, 0.6 per cent. Residential real estate has fallen 0.3 per cent over the last four quarters, largely due to a 1.1 per cent drop in the third quarter of 2024. Construction costs for residential buildings in the 15-census metropolitan area composite rose 3.4 per cent year-over-year, while the average resale price of homes sold in the first quarter of 2025 was 2.4 per cent lower compared to the first quarter of 2024. Similarly, the value of residential structures and residential land have trended in opposite directions over the last four quarters.
In the first quarter of 2025, the pace of household credit market borrowing slowed to $34.5 billion, down 17 per cent from Q4 2024, which, at $41.6 billion, represented the fastest pace of borrowing since the second quarter of 2022. Mortgage demand fell slightly over the same time period, from $30.7 billion to $27.3 billion, but still represented the bulk of household borrowing in the first quarter of 2025. Meanwhile, demand for non-mortgage debt, including consumer credit, fell to $7.3 billion.
Household credit market debt (consumer credit and mortgage and non-mortgage loans) continued to climb steadily, rising 1.1 per cent to reach $3,072.3 billion in Q1 2025, with mortgages accounting for almost 75 per cent of the total.
At the same time, the ratio of household credit market debt as a proportion of household disposable income increased for the second consecutive quarter, ticking up to 173.9 per cent as debt grew faster than income. In other words, there was $1.74 in credit market debt for every dollar of household disposable income in the first quarter, but this was still well below the $1.79 registered at the outset of 2024.