Winnipeg Free Press - PRINT EDITION

Consumer spending up in Q2, but report sees slowdown

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TORONTO -- Consumer spending increased in the second quarter compared with a year ago but figures for June point to a slowdown, according to a report by credit and debit card processor Moneris Solutions.

Moneris said Wednesday that overall, consumer spending increased 4.67 per cent year over year in the quarter, but the smallest amount of growth, 3.72 per cent, occurred in June.

"While the Canadian economy continued to experience healthy growth in the second quarter of 2012, some signs point to a potential reduction in spending," said Jim Baumgartner, president and CEO of Moneris Solutions.

"The summer months usually translate into more Canadians attending and spending at national and community events. The level of participation and activity in Q3 will be a good indicator of consumer confidence leading into the holiday season."

The slower increase in June spending came as consumer confidence also dropped off that month as fears about a global slowdown ramped up amid the European financial crisis and slower Chinese growth.

Economists have also been predicting a slowdown in spending as consumer debt levels are already at all-time highs and it's expected Canadians will rein in their expenses.

During the second quarter, the entertainment category saw the highest increase in overall spending, up 9.43 per cent, while hotels and restaurants came in a close second, with growths of 6.75 and 6.41 per cent, respectively.

The specialty retail category also experienced strong growth, with stationery (6.62 per cent), florists (6.33 per cent) and pet shops (6.14 per cent) leading the increase in dollars spent.

On the other hand, apparel, a traditionally strong spending category for Canadians, experienced more modest growth, with an increase of 2.74 per cent, compared to the same period last year, Moneris said.

Travel showed a modest decrease in spending of 0.49 per cent for the quarter, although the survey showed travel spending increased 10.17 per cent in June.

Nationally, the Prairie provinces led the growth in spending. Alberta earned the country's top spot with an increase of 8.35 per cent in dollars spent, followed by Saskatchewan at 7.8 per cent and then Manitoba at 5.89 per cent.

Elsewhere, consumer spending increased 3.95 per cent in Ontario, 3.52 per cent in British Columbia and 4.92 per cent in New Brunswick.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition July 12, 2012 B6

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