Trend comes amid mixed signals as gloomy forecasts run up against consumer resilience
The latest Statistics Canada retail trade report found that, at least on the top line, retail sales increased in September. The StatsCan report also included an advance retail indicator suggesting sales increased at a faster rate in October.
Retail sales in September increased by 0.6% to $66.5 billion. The advance retail indicator suggests sales increased a further 0.8% in October, though that number will be revised.
September’s positive retail sales number included an increase at motor vehicle parts and dealers, which saw a 1.5% increase in sales. New car dealers saw a 2.4% increase in sales, while used car dealers dropped 2.0%. Gas stations saw a 3.2% increase in sales as well.
Total volume of retail sales increased 0.3% in September. Across Q3 Canadian retail sales were up 0.6% while total volume declined 0.5%.
September’s positive retail sales numbers, however, turn negative when excluding gasoline stations, fuel vendors, and motor vehicle and parts dealers. This more restricted metric, called core retail sales, fell 0.3% in September. Beer, wine, and liquor retail sales dropped 1.8%, supermarkets dropped 0.2% and miscellaneous retailers fell 1.6%.
Eric Lascelles, Chief Economist at RBC GAM, recently shared his outlook for consumers in Canada and the US, noting that despite some surprising resilience cracks are beginning to appear. These largely flat retail numbers can be seen in the context of a growing population, which could point to a per-capita decline in sales.
Read more: Canada's holiday season to see tighter consumer budgets, tough times for retailers
Bloomberg reports that the Bank of Canada will likely look past these nominally positive numbers regarding them as a “temporary pick-up in demand.” The expectation after Governor Tiff Macklem’s comments this week is that the BoC will hold rates steady while waiting for further softening in the economy.
The StatsCan report also offers a regional breakdown of retail sales. In Ontario sales were up 0.3%, though in the Toronto metropolitan area sales fell 0.6%. In Alberta sales increased by 0.9% driven by general merchandise retailers. Only New Brunswick, Newfoundland and Labrador, and the Yukon posted negative retail sales in September.
