- Retail sales dipped 0.3% in January as auto sales fell and gasoline prices declined.
- Excluding prices, volume sales were unchanged for a second straight month in January. They are still up 1.8% year-over-year but have been essentially unchanged over the last 6 months.
Our Take:
The January retail numbers were mixed. Declines were only posted in 4 subsectors, and sales inched up slightly excluding motor vehicle sales. But volume sales were unchanged, and have been essentially unchanged over the last 6 months. Stronger reports for the manufacturing and wholesale sectors still mean that overall GDP growth may have moved back into the positive column in January – even with a pullback in oil production with mandated production cuts in Alberta kicking in. But the retail numbers add to the evidence that rising debt service costs and slower housing markets are slowing household spending growth. We still don’t expect a repeat of the Q4 softness – when consumer spending rose just 0.7% (at an annualized rate) and residential investment fell almost 15%. But household spending can no longer be counted on to drive above-trend economic growth in Canada.
