Canadian retail sales dip slightly in February

Retail sales in Canada decreased 0.2% to $66.3 billion in February as sales fell in four of nine subsectors, representing 48.0% of retail trade. The decrease was led by lower sales at gasoline stations and fuel vendors (-5.0%) and general merchandise retailers (-1.6%), reported Statistics Canada on Friday.

Sam Lion

Core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—increased 0.1% and in volume terms, retail sales decreased 0.7% in February, said the federal agency.

“Leading the decrease in retail sales in February were lower sales at gasoline stations and fuel vendors (-5.0%). In volume terms, sales at gasoline stations and fuel vendors decreased 4.9%. Gasoline prices fell 1.0% on an unadjusted basis in February, amid higher crude oil inventory levels within the United States,” it said.

“The largest increase to retail sales came from motor vehicle and parts dealers (+0.9%), their seventh consecutive increase. The gain was led by higher sales at new car dealers (+0.7%), followed by used car dealers (+4.2%) and automotive parts, accessories and tire retailers (+2.5%).

“Core retail sales edged up 0.1% in February, led by higher sales at clothing, clothing accessories, shoes, jewellery, luggage and leather goods retailers (+4.4%). The increase was observed across all three store types, with sales at clothing and clothing accessories retailers (+4.9%) posting their largest increase since the same month a year prior. The largest decrease to core retail sales came from general merchandise retailers (-1.6%). Sales have declined in this subsector for two out of the last four months.”

On a seasonally adjusted basis, retail e-commerce sales were up 7.8% to $3.7 billion in February, accounting for 5.5% of total retail trade, compared with 5.1% in January, said StatsCan.

“Given the continually evolving economic situation, Statistics Canada is providing an advance estimate of retail sales, which suggests that sales decreased 1.4% in March. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 28.4% of companies surveyed. The average final response rate for the survey over the previous 12 months has been 89.9%,” it said.

Maria Solovieva, Economist with TD Economics, said the decline in retail sales has been expected as the boost from one-time government transfers, such as daycare subsidies and several one-off provincial inflation relief programs, continues to wane.

“One category that stands out is auto sales, which have been supported by relatively strong pent-up demand. But even here, growth is slowing as higher borrowing costs worsen affordability, especially as mortgage costs continue to creep higher,” she said.

“Looking one month ahead, Statistics Canada expects a more pronounced decline in retail trade in March. The recent Survey of Consumer Expectations for the first quarter of 2023 suggests that consumers are expecting to spend less on discretionary items. That said, our internal high-frequency data points to a moderate gain in total spending in March and that puts our tracking for consumer spending slightly above 4% (annualized) in Q1 2023.”

(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)