Highlights:
- September retail sales inched up 0.1% but only because prices rose
- Volume sales declined 0.6% – a third straight monthly drop. Sale volumes dipped lower in Q3 as a whole for the first time since Q2 2016.
- E-commerce sales (not all of which are included in the retail sales totals) were up 16.7% over the past year ending in September. That was much faster than the 6% increase in overall retail sales but still down from 40%+ readings in earlier months
Our Take:
Retail sales inched up 0.1% in September but only because of a price-led 2.6% increase in sales at gasoline stations. Statistics Canada noted that sales at stores typically thought to be sensitive to housing purchases and home renovation bounced back after declining in August but sales at clothing stores fell by 2.8%. Controlling for the impact of prices, sale volumes declined for a third straight month with a 0.6% dip in September. They declined by 1.4% at an annualized rate in Q3 as a whole. Of course, the data is often volatile and the drop in Q3 retraces little of the average 8% per-quarter increase from Q4/16 to Q2/17 — the strongest 3-quarter stretch since 2004. The data does, however, provide further confirmation that the economy as a whole came off the boil in Q3/17. The dip in September retail sale volumes points to some downside risk to our prior expectation that overall GDP inched up 0.1% in the month and also modest downside to our call for a 1.7% Q3 gain. Looking through monthly/quarterly volatility, we think the economy should continue to grow at a slightly ‘above-potential’ pace but likely closer to 2% than the outsized 4% growth per-quarter over the first half of the year.
