Retail sales increased 1.1% to $70.7 billion in January. Sales were up in six of nine subsectors, led by increases at motor vehicle and parts dealers. Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were up 0.9% in January, reported Statistics Canada on Friday.
In volume terms, retail sales were up 1.0% in January, added the federal agency.
Statistics Canada also provided an advance estimate of retail sales, which suggests that sales increased 0.9% in February.
“Following a decline of 1.6% in December, motor vehicle and parts dealers (+2.0%) recorded the largest increase in retail sales in January. Higher sales at new car dealers (+2.5%) led the increase in the subsector, followed by other motor vehicle dealers (+5.6%). In January, the largest decrease in the motor vehicle and parts dealers subsector came from used car dealers (-3.0%),” explained the federal agency.
“Sales at gasoline stations and fuel vendors (-0.4%) were down in January following two consecutive monthly gains. In volume terms, sales at gasoline stations and fuel vendors fell 0.4% in January.”
Statistics Canada said core retail sales rose 0.9% in January after posting a decrease of 0.4% in December. The increase in January was led by higher sales at general merchandise retailers (+3.0%), marking a fourth consecutive monthly gain in this subsector.
“Sales at sporting goods, hobby, musical instrument, book, and miscellaneous retailers (+2.6%) also increased in January, posting a second consecutive monthly gain, it said.
“In January, the largest decrease in core retail sales came from food and beverage retailers (-0.6%). The decrease was led by lower sales at supermarkets and other grocery retailers (except convenience retailers), which fell 0.7% in January after increasing 0.1% in December.”
The report said retail sales increased in all provinces in January. The largest provincial increase in dollar terms was observed in Alberta (+3.5%), led by higher sales at motor vehicle and parts dealers. In Ontario, retail sales increased 0.9% in January on higher sales at motor vehicle and parts dealers. In the census metropolitan area (CMA) of Toronto, retail sales were up 0.6% in the month. In Quebec, retail sales were up 0.6% in January. In the CMA of Montréal, retail sales rose 1.7%.
On a seasonally adjusted basis, retail e-commerce sales increased 1.5% to $4.4 billion in January, accounting for 6.2% of total retail trade, added Statistics Canada.
Maria Solovieva, Economist, TD, said: “Consumers loosened their purse strings to start the year, with retail sales rising in January and early indications pointing to continued demand in February. Momentum in services spending appears intact, based on our internal credit and debit card data, likely supported by higher-income households with greater financial buffers. This keeps our outlook for Q1 real consumption growth at a relatively healthy 1.1% (quarter-on-quarter, annualized).
“That said, the retail report is inherently backward-looking and, in this case, feels particularly in the rear-view day by day. New headwinds – from higher prices at the pump to financial market volatility – risk weighing on demand through both higher costs and a potential reversal of wealth effects.”
Shelly Kaushik, Senior Economist, BMO Capital Markets, said: “Decent retail sales figures for January, and a positive early read for February, highlight consumer resilience in the face of mounting headwinds for the Canadian economy. With higher energy costs expected to take up a larger share of household budgets in the coming months, we’ll be watching to see how other spending components hold up.”
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