Canada’s consumer spending holds firm, and signals a labour market quietly rebalancing

Canada’s consumer economy has been sending mixed messages for months, but the latest update offers a clearer signal: households are still spending, and that resilience is beginning to echo through parts of the labour market. RBC’s newest Consumer Spending Tracker shows that Canadians carried solid momentum into October, with core retail spending rising on a three-month basis. The surge was most visible in entertainment and arts, a category boosted by the Toronto Blue Jays’ playoff run, but it also reflects a broader willingness among households to spend on experiences even as essentials and larger purchases remain more restrained.

The data point to a shift in consumer psychology. After almost two years of caution shaped by higher borrowing costs and softening real incomes, Canadians remain selective but not frozen. Spending on home improvement and renovation remains subdued and only recently reached an eighteen-month high, offering little relief to construction-related industries. Meanwhile, regional divergence is widening: Ontario and British Columbia show stronger spending patterns, while Quebec’s spending momentum lags behind. With population growth slowing sharply in Q3, the country can no longer rely on demographic expansion to lift aggregate consumption. The trajectory now depends more squarely on household behaviour.

This consumer backdrop lands at a time when the labour market itself is showing tentative signs of stabilization. The latest Labour Force Survey recorded a stronger-than-expected gain of 67,000 jobs in October and a dip in the unemployment rate to 6.9 percent. Underneath the headline, the picture remains nuanced. Most of the gains were concentrated in part-time positions and in the private sector, while full-time roles were largely flat. Wage growth continues at a moderate pace, suggesting employers remain cautious but not tightening aggressively. The improvement is real, but it is not yet the foundation for an unambiguous labour-market rebound.

When stitched together, these two developments (firmer consumer spending and selective job creation) reveal the contours of a labour market that is neither booming nor contracting, but quietly rebalancing. Experience-driven sectors, from leisure to hospitality to retail-adjacent services, stand to benefit the most from the spending patterns identified by RBC’s tracker. These industries were among the earliest to feel the slowdown earlier in the year, yet they now appear poised for a period of stabilization and possibly renewed hiring, though with a strong tilt toward part-time and short-term roles. For staffing firms, this marks a shift from volume-driven placements to more targeted deployments where flexibility, speed and match quality matter more than sheer scale.

The story is more subdued for housing-adjacent labour. With renovation activity still restrained and homebuying slow to recover, construction and specialized trades continue to face a soft demand cycle. This aligns with broader structural pressures seen across job-posting indices in recent months, which suggest that industrial and production-related hiring is rising only modestly. Combined with slower population growth — which reduces both consumer-demand pressure and labour supply inflows — the coming quarters are likely to test the adaptability of employers who have relied heavily on demographic expansion to fill roles.