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Canadian Retail Sales Rise 0.7% In October

ByThe National Bank of Canada
Published 12/23/2012, 05:07 AM
Updated 05/14/2017, 06:45 AM
FACTS:

Canadian retail sales rose 0.7% in October, topping consensus expectations. There was also a onetick upward revision to the prior month from +0.1% to +0.2%. In October, there were stronger sales in 8 of the 11 retail subsectors. Auto dealership revenues rose 1.6%, buoyed by sales of new vehicles which more than offset declines in sales of used vehicles. Excluding autos, sales rose 0.5%, also handily beating consensus. Ex-autos sales were supported by increases in gasoline sales (+1.6%), food/beverage (+0.5%), clothing and accessories (+1.8%) among others.

Those offset declining sales elsewhere, including the 1.6% drop in electronic sales. In real terms overall retail sales rose 0.3% after two straight declines (top chart). Regionally, on a year-on-year basis, Alberta continues to lead the nation with retail spending up 6.1%. That compares with year-on-year growth of just 1.3% in Ontario and 1.2% in Quebec. Worse, sales are down 1.1% in BC and 2.4% in New Brunswick on a year-on-year basis.Retail sales rise in October
Gasoline price relief for consumers in November
Consumption spending growth may have decelerated in Q4
OPINION: The October retail report was much better than expected with strong sales of discretionary items like autos. The share of gasoline in retail sales, at 12.9%, is the highest since the oil spike of mid-2008. But Canadians got some relief at the pumps in November as gasoline prices dropped more sharply than usual (middle chart).

That should help support spending in that month, although the drop in confidence (according to the Conference Board) will provide an offset. For now, with one month of data, retail volumes are tracking annualized growth of 0.6% in Q4, a deceleration from Q3's +2.2% (bottom chart). That’s consistent with our call for another quarter of tepid growth in Q4.

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