Retail sales increased 0.6% to $67.6 billion in October. Sales were up in five of nine subsectors and were led by increases at motor vehicle and parts dealers, according to a report released Friday by Statistics Canada.
Core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—were up 0.2% in October. In volume terms, retail sales were unchanged in October, said the federal agency.
Sales up at motor vehicle and parts dealers
The largest increase in retail sales in October was observed at motor vehicle and parts dealers (+2.0%). Higher sales at new car dealers (+2.5%) led the increase, followed by used car dealers (+2.5%). Automotive parts, accessories and tire retailers (-3.3%) were the only store type within this subsector to record a decrease in October, it said.
Sales at gasoline stations and fuel vendors (-0.5%) were down for a sixth consecutive month in October. In volume terms, sales at gasoline stations and fuel vendors decreased 4.7%, following an increase of 4.1% in September, it added.
Core retail sales rise
“Core retail sales increased 0.2% in October, posting their second consecutive monthly increase. The gain was led by higher sales at furniture, home furnishings, electronics and appliances retailers (+2.5%). In October, higher sales were also recorded at health and personal care retailers (+0.8%),” noted Statistics Canada.
“The largest decrease in core retail sales in October came from food and beverage retailers (-0.7%). Sales at food and beverage retailers were down from lower sales at supermarkets and other grocery retailers (except convenience retailers) (-0.9%) and beer, wine and liquor retailers (-0.4%).”
On a seasonally adjusted basis, retail e-commerce sales were up 1.5% to $4.2 billion in October, accounting for 6.2% of total retail trade, said StatsCan.
“Statistics Canada is providing an advance estimate of retail sales, which suggests that sales were relatively unchanged in November. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 50.6% of companies surveyed. The average final response rate for the survey over the previous 12 months was 88.7%,” it said.
Andrew Grantham, Senior Economist, CIBC Capital Markets, said Canadian retail sales posted a second consecutive 0.6% advance in October, although the details were not as strong as in the prior month.
“Much of the gain in October sales was driven by prices, and by increased spending in the often volatile auto sector . . . Gains in furniture & electronic stores were offset by declines in building materials & supplies and food & beverage. The advance estimate for November pointed to no change in sales relative to the prior month. However, the announcement by the Federal government in late November of a GST holiday beginning mid-December may have encouraged some households to defer purchases and therefore could have dampened November retail sales slightly. We will need to see the December data to get a full view of holiday spending,” he said.
“Even though the latest release wasn’t as strong as the prior one, consumer spending has still clearly improved relative to the trend seen earlier in the year. However, that fact is to be welcomed and not feared from an inflation point of view. Evidence of bloated inventory levels in the retail sector during the first half of the year showed plenty of room for spending to accelerate without necessarily resulting in upward pressure on prices.”
Maria Solovieva, Economist, TD Economics, said Canadians embraced the festive spirit in October, with spending gaining momentum as the official retail holiday season got underway.
“While the advance estimate for November suggests some softening, the GST holiday is expected to ring in stronger sales for December, giving retail cash registers a boost,” she said.
“With inflation back at target, the three month average real retail sales per capita trend – a key indicator of purchasing power and consumer activity – posted growth for the second consecutive month. We forecast real personal consumption expenditure to grow at a tad above-trend pace of 1.9% annualized in Q4.”
Advance estimate for wholesale trade
Statistics Canada said it is providing an advance estimate of sales in the wholesale trade sector for November. The advance results for November indicate that wholesale sales (excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain) fell 0.7%. The decline reflects lower sales in the motor vehicle and motor vehicle parts and accessories subsector.
This estimate was calculated based on a weighted response rate of 58.8%. The average final response rate to the survey over the 12 preceding months was 81.9%. As Statistics Canada continues to collect data for the November reference month, this early indicator is subject to a higher revision rate than the regular monthly release, it said.
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