Retail sales increased 0.4 per cent to $66.6 billion in August with sales up in four of nine subsectors and led by increases at motor vehicle and parts dealers, reported Statistics Canada on Friday.
Core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—were down 0.4 per cent in August, said the report, adding that in volume terms, retail sales increased 0.7 per cent in August.
Retail sales increase in August
“The largest increase in retail sales in August was observed at motor vehicle and parts dealers (+3.5 per cent). Higher sales at new car dealers (+4.3 per cent) led the increase, followed by used car dealers (+2.1 per cent). Lower sales at other motor vehicle dealers (-0.3 per cent) were offset by gains at automotive parts, accessories and tire retailers (+0.4 per cent),” explained StatsCan.
“Sales at gasoline stations and fuel vendors (-2.7 per cent) were down in August. In volume terms, sales at gasoline stations and fuel vendors decreased 2.1 per cent.
“Following two consecutive monthly increases, core retail sales were down 0.4 per cent in August on lower sales at food and beverage retailers (-1.5 per cent). Sales at food and beverage retailers were down in all four store types, led by supermarkets and other grocery retailers (except convenience retailers) (-1.9 per cent).”
The report said lower sales were also reported at furniture, home furnishings, electronics and appliances retailers (-1.4 per cent) in August, but the largest increase in core retail sales came from sporting goods, hobby, musical instrument, book, and miscellaneous retailers (+0.9 per cent).
Sales increase in four of nine subsectors in August
“Retail sales increased in seven provinces in August. The largest provincial increase was observed in Ontario (+0.9 per cent), led by higher sales at motor vehicle and parts dealers. In the census metropolitan area (CMA) of Toronto, sales were up 0.6 per cent. In Quebec, retail sales increased 1.0 per cent in August. In the CMA of Montréal, sales were up 1.5 per cent. The largest provincial decrease in retail sales in August was observed in Alberta (-1.1 per cent). The decrease was led by lower sales at food and beverage retailers,” added the federal agency.
On a seasonally adjusted basis, retail e-commerce sales were down 2.5 per cent to $3.9 billion in August, accounting for 5.9 per cent of total retail trade, compared with 6.1 per cent in July, said the report.
“Statistics Canada is providing an advance estimate of retail sales, which suggests that sales increased 0.4 per cent in September. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 61.1 per cent of companies surveyed. The average final response rate for the survey over the previous 12 months was 89.1 per cent,” said Statistics Canada.
Andrew Grantham, Senior Economist, CIBC Capital Markets, said the report suggests that consumer spending remains patchy, and that further reductions in interest rates will likely be needed to bring a sustained acceleration.
Maria Solovieva, Economist, TD, said strong auto sales continued to drive retail growth in August. However, ex-autos, sales were the weakest in three months.
“Our internal credit and debit card spending data, which primarily reflects non-durable and durable goods, indicates a softening trend through September. Together, these signals align with our forecast, where a rebound in durable goods is expected to be the largest contributor to Q3 growth in total personal consumption expenditures – projected to rise at a below-trend rate of 1.0-1.5 per cent quarter-on-quarter (annualized),” she said.
“Alongside the weakness in core sales, the downward trend in retail spending per capita remains intact, marking a major area of concern for the Bank of Canada, which moved to cut rates by 50 basis points this week. By accelerating its easing cycle, the Bank wants to see consumption growth strengthen, but it risks sparking more demand for housing instead. Financial markets are currently pricing in a coin-flip chance of another jumbo cut in December.”
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