Following a solid increase in October, retail sales continued to rise in November gaining 0.7% on the month. Looking ahead, the picture appears less bright, with Statistics Canada’s flash estimate projecting a 2.1% decline in December.
Higher prices continued to inflate retail sales growth in nominal terms. Stripping away the effect of prices, the volume of sales was up just 0.2% on the month.
Sales of motor vehicle & parts edged lower on the month (-0.3), but receipts at gasoline stations edged higher in both nominal (+4.9%) and volume terms (+3.5%).
Core sales, which exclude autos and gasoline, rose by 0.5% month-on-month.
- Core sales were supported by higher sales at building materials, garden equipment and supplies dealers (+3.0%) and at food & beverage stores (+1.0%). Clothing and accessories stores also fared well (+3.0%).
- On the other hand, sales declined at furniture and home furnishings retailers (-1.2%) and at electronics and appliance stores (-1.1%). Sales of electronics and appliances have been weak for the last eight months, and are now 16.7% below their year ago level.
- Online sales edged 3.5% lower in November. The share of e-commerce sales relative to total retail sales was 6.9%, down 0.4 percentage points from a year ago.
On a regional basis, sales were up in seven provinces. Quebec led the way with retail sales rising by 1.2%. Sales were also higher in Ontario (+0.5%) and British Columbia (+0.8%).
Key Implications
Retail sales ended 2021 on softer footing. Sales were nearly flat in real terms in November, with an outright decline projected for December. Global supply-chain bottlenecks could have prompted consumers to shop early, shifting activity to October. Additionally, severe floods in British Columbia and the Atlantic provinces affected business operations and caused shipment disruptions in and out of those provinces.
With inflation hitting a multi-decade high in December, it’s no surprise that rising prices were evident in today’s report. While nominal retail sales were 4.4% higher than a year ago, volumes were just 0.1% above their November 2020 level.
Looking ahead, the picture for retail spending is mixed. Capacity limits, staff absenteeism and health concerns may weigh on in-store sales at the start of the year. Supply-chain bottlenecks are also likely to intensify once again, leading to delayed shipments, higher prices, and less choice for consumers. That being said, retailers, particularly the ones with online operations, could also see a boost to their sales as consumers redirect their spending from services to goods, similar to previous episodes of lockdowns.
