- BMO encourages Canadians to support their communities by
spending at local small businesses
TORONTO, Dec. 11, 2020 /CNW/ - Household finances during
the COVID-19 pandemic in Canada
have shown remarkable strength relative to previous downturns –
courtesy of historic government support – and Canadians appear
ready to spend as soon as they are able, according to a new outlook
for the Canadian consumer from BMO Economics.
"Canadians' financial health is highlighted by a mountain of
$150 billion in excess savings," said
Doug Porter, Chief Economist, BMO
Financial Group. "We believe households will need little policy
prodding to ramp up spending on services, when health circumstances
allow; witness the speed and vigour with which consumers returned
to stores and malls during partial re-openings this summer. We look
for spending to rebound almost 6 per cent in 2021, and by more than
7 per cent when inflation is factored in."
The report noted significant changes to household shopping
habits over the course of the year. "Perhaps the biggest winners of
all were online retailers, with ecommerce sales more than doubling
at the height of the lockdown and remaining elevated – up 74 per
cent year over year in the third quarter," noted Mr. Porter.
"Meanwhile, the ability to work from home gave consumers an
insatiable demand for furniture and household equipment, up 10 per
cent year over year. At the other end of the spectrum, it's no
surprise that spending on hotels and restaurants – down 54 per cent
and 22 per cent year over year respectively – eroded heavily."
Of note, massive government support, mortgage deferrals and a
double-digit savings rate of 27.5 per cent in the second quarter
(compared to last year's average rate of just 1.4 per cent) have
combined to improve many measures of household financial strength.
"The household debt-to-income ratio has taken a big step back this
year after hovering near all-time highs" stated Mr. Porter. "Debt
service burdens also eased considerably with interest rates slashed
to record lows. Meanwhile, rising real estate values have been an
important driver in improving household net worth in 2020."
"While the pandemic continues to pose significant challenges,
Canadians have demonstrated financial resiliency while achieving an
unprecedented level of savings," said John
McNain, Head, Personal Banking Products and Experience, BMO
Bank of Montreal. "As we look
ahead to brighter days, we encourage Canadians to continue their
support for local small businesses in their communities. Continuing
to prioritize support for local communities will go a long way to
supporting Canada's recovery and
continued resiliency once the economy re-opens."
The full report is available at
https://economics.bmo.com/en/publications/detail/213ea8f1-6f81-4416-bb90-bafefb57968e/.
About BMO Financial Group
Serving customers for
200 years and counting, BMO is a highly diversified financial
services provider - the 8th largest bank, by assets, in North
America. With total assets of $949 billion as
of October 31, 2020, and a team of diverse and highly engaged
employees, BMO provides a broad range of personal and commercial
banking, wealth management and investment banking products and
services to more than 12 million customers and conducts business
through three operating groups: Personal and Commercial Banking,
BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group