Canadian retail sales decline in November but preliminary data suggests a hike in December

Retail sales decreased 0.1% to $61.8 billion in November, according to a report released Friday by Statistics Canada.

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The federal agency said sales decreased in six of 11 subsectors, representing 47.4 per cent of retail trade. The decrease was led by lower sales at food and beverage stores (-1.6 per cent) and building material and garden equipment and supplies dealers (-3.8 per cent). Core retail sales—which exclude gasoline stations and motor vehicle and parts dealers—decreased 1.1 per cent, their largest decline in 11 months, it said, adding that in volume terms, retail sales decreased 0.4 per cent in November.

“Given the continually evolving economic situation, Statistics Canada is providing an advance estimate of retail sales, which suggests that sales increased 0.5 per cent in December. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 33.5 per cent of companies surveyed. The average final response rate for the survey over the previous 12 months has been 90.3 per cent,” said StatsCan.

“Posting their largest decrease in 11 months, core retail sales fell 1.1 per cent in November, led by lower sales at food and beverage stores (-1.6 per cent). Decreases were observed in all four store types in this subsector, led by lower sales at supermarkets and other grocery (except convenience) stores (-1.3 per cent). The Consumer Price Index (CPI) noted that prices of food purchased from stores rose 11.4 per cent on a year-over-year basis,” said Statistics Canada.

“Also contributing to the decline in retail sales in November were lower sales at building material and garden equipment and supplies dealers (-3.8 per cent), as this subsector recorded its largest decrease in seven months and coincided with deteriorating housing market conditions.”

On a seasonally adjusted basis, retail e-commerce sales were down 2.7 per cent in November. On an unadjusted basis, retail e-commerce sales were down 3.5 per cent year over year to $4.4 billion in November, accounting for 6.5 per cent of total retail trade. The share of e-commerce sales out of total retail sales fell 0.6 percentage points compared with November 2021, said the federal agency.

Ksenia Bushmeneva, Economist with TD Economics, said outside of spending more on gas and new cars, consumers took a breather from shopping in November, perhaps waiting for discounts and building up some financial cushion ahead of a spending-heavy December.

“Indeed, Statistics Canada flash estimate suggests that retail sales have rebounded in December. This is in line with our internal debit and credit card  aggregate spending data, which also points to an increase in consumer spending in December. A sizeable drop in gasoline prices last month could have given consumers a much-needed break, leaving more cash to spend on gifts,” she said.

“Even as consumers appear to have kept on spending through December, they will likely need to tighten their belts this year. As we note in our latest forecast, we expect that as 2023 unfolds, consumer spending will likely edged lower in the second half of the year amid escalating debt servicing costs, which will take a bite out of discretionary spending.”

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)