Retail sales increased 0.7% to $72.1 billion in February. Sales were up in seven of nine subsectors, 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 0.6% in February. In volume terms, retail sales increased 0.3% in February, said the federal agency.
Statistics Canada also provided an advance estimate of retail sales, which suggests that sales increased 0.6% in March.
“The largest increase in retail sales in February was observed at motor vehicle and parts dealers (+1.0%), rising for a second consecutive month. The increase was led by higher sales at new car dealers (+0.7%), followed by used car dealers (+4.0%),” said Statistics Canada.
“Sales at gasoline stations and fuel vendors were unchanged in February, following three consecutive monthly gains. In volume terms, sales at gasoline stations and fuel vendors edged up 0.1% in February.”
The federal agency said core retail sales rose 0.6% in February, posting their second consecutive increase. The gain was led by higher sales at general merchandise retailers (+1.2%) and food and beverage retailers (+0.9%). The increase in the food and beverage retailers subsector was led by higher receipts at supermarkets and other grocery retailers (+1.6%).
“Higher sales were also recorded at clothing, clothing accessories, shoes, jewelry, luggage and leather goods retailers (+1.1%) in February.
“The largest decrease in core retail sales came from building material and garden equipment and supplies dealers, which fell 0.6% in February after increasing 1.3% in January.”
On a seasonally adjusted basis, retail e-commerce sales decreased 0.6% to $5.1 billion in February, accounting for 7.0% of total retail trade, compared with 7.1% in January, added Statistics Canada.
Maria Solovieva, Economist, TD, said consumers delivered another solid month in February, with early indications pointing to continued strength in March.
“That said, inflation jumped in March, suggesting some of the momentum is being driven by higher prices rather than broad-based demand growth. Our internal TD Spend data point to some softening in discretionary spending in March,” she noted.
“Higher energy prices will dent purchasing power, but we do not expect this to materially weaken domestic demand beyond what’s already embedded in our outlook. Together with the drags from weak population growth and trade-related headwinds the economy is expected to grow at a below-trend pace this year.”
“Overall, it appears that retail sales in Q1 have posted their best quarter for growth since before US trade tensions started to negatively impact consumer sentiment. However, with higher pump prices limiting the ability of some households to make discretionary purchases, we expect consumer spending to slow again in volume terms during Q2,” said Andrew Grantham, Senior Economist, CIBC Capital Markets.
“Two months of rising retail sales highlights underlying consumer resilience in the face of significant headwinds, namely elevated economic uncertainty and outright population declines. Still, softer spending volumes and signs of further weakness in March suggest consumers can only hold on for so long,” added Shelly Kaushik, Senior Economist, BMO Capital Markets.
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