Consumer spending signals from Royal Bank of Canada’s (RBC) customers indicate that retail sales growth slowed last month, according to the latest data from the bank’s cardholders.
In a research note, RBC said that its data points to weaker consumer spending in August, as the growth of core retail sales (excluding gas and autos) came in at 0.4%, seasonally adjusted, down from 1.1% in July.
“Total spending was down 2.2% [month-over-month] from July, reversing the previous month’s gain,” it said.
Additionally, the three-month moving average also grew more slowly, it noted.
“The ongoing contraction in gasoline spending — continuing on a three-month average basis since the elimination of the consumer carbon tax this spring — has been a significant driver of this trend,” the note said.
Alongside the slowdown in spending on gas, spending on groceries “has also flatlined since May,” it said. Spending on “essentials” overall declined by 0.6% in August.
At the same time, other spending categories “maintained positive growth,” it noted.
RBC said that slower, but still-positive growth in consumption also aligns with its overall economic outlook.
“We believe Canada’s economy will resume slow, but positive, GDP growth after a Q2 decline with relatively resilient consumer spending offsetting persistent headwinds in the industrial sector,” it said.