- Canada’s retail sales fell 0.1% (m/m) in September, following an upwardly revised 0.1% uptick in August (previously reported as a 0.1% decline). The release was better than the median consensus forecast for a 0.3% drop.
- The picture was unchanged after stripping out price impacts, with volumes also edging down 0.1% on the month.
- Sales were down in six of the 11 major categories. Lower sales at motor vehicles and parts dealers (-1%) and gasoline stations (-2.3%) drove the bulk of the decline. Providing some offset were higher sales at food and beverage stores (+1.2%) and building material and gardening equipment stores (+3.3%).
- Regionally, sales fell in seven of the 10 provinces. Lower sales in Alberta (-1.3%), New Brunswick (-3.7%), and Manitoba (-1.6%) were responsible for the headline decline. Quebec (+0.7%) and Ontario (+0.3%) provided some offset. Sales in British Columbia fell a modest 0.2%.
Key Implications
- September’s almost-flat print doesn’t do much to change our views on Canadian retail sales. Performance is still nothing to write home about. The good news is that momentum (in volumes) has continued to improve, with volumes up 0.5% (1.9% annualized) in the third quarter. The release leaves our third quarter GDP tracking unchanged near the 1% mark, slightly below the Bank of Canada’s 1.3%.
- The ongoing strength in Canadian labour markets, the recent momentum in housing markets and wages, and the downshift in borrowing rates may have provided a modest lift to consumer spending. Still, elevated household debt levels and associated debt-servicing costs will continue to cap any meaningful acceleration in retail sales or consumer spending.
