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Income and Expenditure Accounts Technical Series
Estimates of Cross-border Shopping, 2006 to 2012
5. Quarterly results
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This section uses seasonally adjusted quarterly data to examine the variation in total cross-border spending, along with same-day and overnight spending, from 2006 to 2012. In addition, these quarterly data are used to estimate the intensity of cross-border spending in relation to changes in domestic retail spending.
Chart 4 presents total cross-border spending on a quarterly basis, which increased progressively from late 2009 to 2012. The CBS estimates closely mirror movements in the exchange rate. According to these quarterly data, CBS increased to just under $2.0 billion in the last quarter of 2007, mainly as a result of the significant increase in motor vehicles purchased from the United States. In the second quarter of 2012, total purchases grew to just over $2.0 billion. At these points in time, the exchange rate hovered around parity.
As the Canadian dollar depreciated during the economic downturn at the end of 2008, total purchase of goods from the United States dropped by 12.0% in the last quarter of 2008 and continued to decline until the Canadian dollar began to appreciate again in the second quarter of 2009. The other two sets of statistical assumptions used to produce estimates of CBS yield similar results.
As previously noted, the expenditure by Canadians during overnight trips to the United States appears to be a significant determinant of total cross-border spending. Chart 5 demonstrates that on a quarterly basis from 2006 to 2012, the estimates for overnight spending are relatively stable and trended upwards over time. Overnight spending in the United States reached its peak of $939 million in the second quarter of 2012, when the Canadian dollar was just below parity. When the Canadian dollar appreciated significantly in the third quarter of 2007 (5.1%), the amount spent on overnight trips to the United States increased by 19.3%. In the last quarter of 2008, at the start of the recession, overnight spending declined by 3.0%, while the Canadian dollar depreciated by 14.1%.
Chart 6 shows that same-day spending reached its peak in the last quarter of 2012 totalling $215 million, when the Canadian dollar was just above parity. Same-day spending in the United States varies in accordance with movements in the Canada/United States exchange rate. When the Canadian dollar depreciated towards the end of 2008, to about 82 cents USD, same-day spending declined by 17.1% on a year-over-year basis. During late 2009 to 2011, as the dollar recovered in the post-recession period, same-day spending in the United States steadily increased.
Chart 7 examines total cross-border spending as a ratio of retail trade sales on a quarterly basis for each of the three scenarios. These ratios are quantitatively similar under each set of assumptions, and have increased over time. Under the medium expenditure scenario, quarterly estimates range from 1.1% to a maximum of 1.9%, when compared against domestic retail spending. The low and high expenditure scenario estimates range from 0.9% to 1.5% and from 1.5% to 2.4% respectively.
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