TORONTO - Canadians spent more during the past holiday season than they did a year earlier, according to data from the country's largest payment processor.
Moneris Solutions reported Thursday that purchases through its debt and credit card processing machines were up 5.8 per cent year-over year in the fourth quarter -- which includes October, November and December.
The new data suggest that 2011 holiday sales may have been better than expected -- some retailers have indicated that their sales were weaker during the period -- and also shows that most of the growth was at restaurants and grocery stores.
Spending at restaurants was up 10.6 per cent, while grocery store purchases grew 5.6 per cent, Moneris said.
The data appear to be at odds with some early indications from retailers and consultants that holiday sales were disappointing due to cautious consumers reluctant to splurge.
"Despite the perceived volatile economy, 2011 was another great year for Canadian retailers overall," said Jim Baumgartner, president and CEO at Moneris Solutions.
"We are confident that this trend will continue into 2012."
However, others are not so confident that retail sales will improve this year as consumer confidence in December waned to its lowest level since May 2009 amid slowing income gains, rising unemployment, record high household debt and alarming signals from Europe. Those issues are also expected to persist well into 2012.
Spending tracked on Moneris machines was strongest in November, with a 6.2 per cent increase, followed by a 5.6 per cent rise in December. Spending in October was lower, posting 5.4 per cent growth from a year earlier.
December sales were fuelled by an increase in credit card use, especially during Boxing Week, Moneris said. Credit card spending was up 7.1 per cent last month from the same month in 2010, while debit card spending grew by 4.4 per cent.
However, the average price of credit card sales was down slightly -- 0.8 per cent -- while debit card purchases inched 0.2 per cent higher.
The increase in credit card use could be a troubling sign, given that Canadian debt loads were already at record highs of 151 per cent of income going in to the busiest shopping season of the year.
Earlier signs pointed toward a slowdown in consumer holiday spending. A Bank of Montreal survey released Wednesday indicated that 76 per cent of respondents spent less or the same on holiday gifts, trips and entertainment than they did in 2010.
Reitmans (Canada) Ltd. (TSX:RET), which also owns chains like Smart Set and RW& Co., reported it saw December sales fall 0.1 per cent.
Electronics giant Best Buy Co. said weaker than expected traffic during the week before Christmas and low demand in Canada and Europe put a crimp in its December sales.
And retail consultancy CustomerLAB, which works with companies including drug, department, food and specialty stores said major retailers are reporting flat pre-Christmas sales and low turnouts for Boxing Day shopping.
Also on Thursday, Tesco PLC, Britain's biggest retailer by sales, warned that it will see minimal profit growth this year following one of its worst Christmas performances in years.
In the U.S., the National Retail Federation said Thursday that retail sales for November and December were up 4.1 per cent from the month a year ago.
But U.S. merchants had to mark down merchandise to get shoppers to buy in the face of a challenging economy, which resulted in a string of retailers reducing their earnings outlooks.
There is no similar Canadian tracking mechanism for tracking overall holiday sales.
But the latest data from Statistics Canada suggested there was positive momentum heading into the season with retail sales exceeding expectations in October, rising a solid 1.0 per cent to $38.6 billion.
Retail sales data for November will be released Jan. 24.
Most analysts expect consumer spending to slow. In the past year, retail sales have increased by 4.4 per cent, while income growth has risen by 3.7 per cent. That means Canadians have been dipping into savings to spend, normally an unsustainable behaviour.
However, Moneris data, which does not include cash transactions, suggested the fourth quarter growth in spending was slightly ahead of its numbers for the third quarter, which showed a 4.9 per cent rise in spending.
The Moneris data reflected a trend in which the resource-rich Prairie provinces are outspending the rest of Canada. Alberta and Saskatchewan led spending on its machines.
December 23rd was the busiest shopping day of the year, when the number of transactions peaked in the mid-afternoon.
Boxing week sales were up eight per cent electronic sales slid perhaps because of the influx of pre-holiday sales.
Online spending also grew by 14.2 per cent in the fourth quarter, thanks in part to the Cyber Monday trend -- retailers offering online bargains on the first Monday after the U.S. Thanksgiving -- catching on.
Transactions at clothing stores grew 4.8 per cent. The highest growth volumes were recorded at fast food outlets, up 16.5 per cent and pet shops, up 13.8 per cent.
Spending declines were tracked at travel agencies, down 11.4 per cent, camera stores, down 6.6 per cent and department stores, where spending was down 3.9 per cent.
Meanwhile, Moneris said Canadian donations to charities were up 13.1 per cent compared to a year ago.
