Treading Water: What Resilient Cardholder Data Reveals About the Next Phase of the Labour Market

Current economic data from the RBC Consumer Spending Tracker reveals a Canadian consumer base that is increasingly prioritizing essential expenditures and experience-based services over discretionary physical goods. While overall cardholder spending has remained resilient, the composition of that spending suggests a shifting landscape for the national labour market.  

Shifts in Consumption and Sectoral Labour Demand

A primary trend identified in the spending data is the divergence between goods and services. Discretionary goods, particularly in the clothing and retail sectors, have seen a contraction. Conversely, services such as travel, entertainment, and arts have maintained momentum. This shift indicates that labour demand in the immediate future may continue to soften in traditional retail environments while remaining robust in the hospitality and tourism sectors.  

The resilience of "experience-related" spending suggests that employers in leisure and hospitality will likely face continued pressure to attract and retain staff. This sector was among the hardest hit during the early 2020s, and its current growth trajectory implies a need for frontline service workers, event coordinators, and travel professionals. Meanwhile, the persistent weakness in discretionary retail suggests that hiring in those areas may remain frozen or move toward leaner, more automated staffing models as companies attempt to protect margins against declining sales volumes.

The Impact of Essential Costs on the Workforce

Higher gasoline prices and the rising cost of essentials are acting as a secondary tax on the Canadian consumer. Because gasoline and groceries are non-discretionary, increased spending in these categories directly cannibalizes the "discretionary income" that would otherwise fuel broader economic growth. For the labour market, this creates a double-edged sword.

First, businesses in discretionary sectors may see a reduced "ability to pay," potentially leading to stagnant wage growth as they grapple with lower sales. Second, as employees face higher commuting costs and living expenses, there may be an intensified demand for higher wages to maintain purchasing power. This friction often results in increased job-hopping as workers seek roles that either offer better compensation or allow for remote work to mitigate fuel costs.