Canada: January Retail Sales End 3-Month Slide
Canada: January Retail Sales End 3-Month Slide Retail sales up 1.9% in January Excluding-autos, sales up 1.3%
Canadian retail sales kicked off the year on a positive note, rising by 1.9% in January. Still, this increase was not nearly enough to offset the massive 5.4% decline seen in December. And coming off three consecutive months of losses, sales are still down 7% from the peak in September and 5.8% below year-ago levels. Stripping away price effects, the picture was quite similar, as sales volumes were up 1.8% on the month.
While the gains in retail sales were fairly widespread in January - with five of eight sectors rising on the month - the bulk of the increase stemmed from the automotive sector, which was up 3.4%. New car dealer sales jumped 6.4%, marking only the second monthly increase in the past 12 months, while gasoline station sales were up 2.6% - largely due to higher pump prices.
Excluding the auto sector, sales were still up by 1.3%, with clothing and accessories stores (+3.0), food and beverage stores (+2.1%) and pharmacies and personal care stores (+2.0%) all contributing to the boost in sales. While hefty discounts were likely underpinning clothing sales, the latter two sectors tend to be more price inelastic, suggesting these purchases were less discretionary. On the flip side, housing related sectors continued to show weakness, with furniture, home furnishings and electronics sales (- 0.7) down for a sixth straight month, while building and outdoor home supplies (-1.4%) have fallen in each month since September.
Regionally, retail sales rose in all provinces except Manitoba, which saw sales slump 0.6% on the month. British Columbia outperformed with at 3.1% gain, while Ontario (+3.0) and Saskatchewan (+2.9) were not far behind. Compared to year-ago levels, retail sales in all provinces remain in the red, with British Columbia (-8.5%) and Alberta (-7.3%) experiencing the steepest declines.
While the January’s retail sales numbers look good on the surface, we caution against interpreting this as the beginning of a new upward trend. Indeed, January’s increase is likely just a bounce back from the massive drop recorded in December. And given the headwinds that will continue to mount against Canadian consumers - namely a contraction in employment and income - retail spending in the coming months will likely resume the downtrend that began in the fourth quarter of last year. However, as monetary and fiscal policy measures begin to gain traction towards the end of this year and into next, consumers will likely ease up and gradually loosen those purse strings. For a 2009-10 retail sales forecast by province, please see the Provincial Economic Forecast dated March 17th available on our website.
TD Bank Financial Group
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.
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