Canada's personal savings rate, which had tumbled to the lowest level since the 1920s in the second quarter of the year, appears to be clawing its way back up.
While it remains in negative territory — meaning most Canadians are still spending more than they earn — the savings rate rose to minus 0.2 per cent in the third quarter from minus 0.6 per cent in the previous quarter, Statistics Canada said Wednesday.
“We are looking for it to return to positive territory next year” to between 1 and 2 per cent, said Mark Chandler, senior financial economist at Scotia Capital Inc.
That's because wages have been growing while personal taxes are expected to decline, giving Canadians more money in their pockets. At the same time, interest rates are on the rise, which is expected to slow spending and may put a dent into the housing market. Thus Canadians might spend less on big-ticket items such as appliances and cars next year.
The savings rate had plunged throughout this year as rock-bottom mortgage rates spurred Canadians to buy houses and spend on home renovations and home furnishings.
By contrast, the savings rate 10 years ago stood at 10 per cent and 20 years ago was at 20 per cent.
© The Globe and Mail
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