Toy orders, parka sales illustrate why Canada's economy is stalling
Canadian companies are painting a stark picture of a consumer who’s pulling back on spending, as rising debt payments and inflation force households to change their behaviour.
From big-box retailers to toy marketers to coat manufacturers, recent corporate earnings results and executives’ comments underscore how quickly the economic temperature is changing after two years of robust growth.
Canadians have the highest household debt levels among Group of Seven countries, and they feel the pinch of higher rates sooner than U.S. consumers because their mortgage terms tend to be shorter. More than a third of mortgage borrowers have seen their payments increase since February 2022, according to central bank data.
Consumer weakness spilled into full view in Canadian Tire Corp.’s third quarter as its customers curbed spending on non-essential items, pushing comparable sales down 1.6 per cent relative to the previous year. The company — which owns a collection of retail brands that sell sporting goods, hardware, auto parts, clothing and other categories — said the soft trends were particularly notable in Ontario and British Columbia, the two provinces with the most expensive housing markets.
Chief executive Greg Hicks calls it an environment of “relentless uncertainty,” despite economists’ belief that rate hikes are likely done.
“The future is increasingly murky, given the Bank of Canada’s pause was couched in a hawkish tone around risks of further inflation and the potential of more policy rate moves down the road,” Hicks told analysts.
Spin Master Corp., a Toronto-based toymaker that sells brands such as Paw Patrol and Bakugan, reported a 29 per cent decline in gross sales of toy products in Canada in the first nine months of
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