Sales at bricks-and-mortar stores in B.C. deteriorated again in July with a decline of 0.8% both on a monthly and year-over-year basis.
This marked a fourth straight contraction and sixth decline in the course of eight months. At $7.07 billion, sales were the lowest since January 2018.
Monthly sales declines were spread widely among store segments led by motor vehicle and parts dealers, home furniture and furnishing stores and building materials and gardening stores. Lower gasoline prices also cut into headline sale figures.
Regionally, Metro Vancouver sales growth outpaced the rest of the province with a 0.5% monthly gain to $3.28 billion, while sales in the rest of the province declined 1.8%.
Year-to-date sales rose only 0.5% with vehicle sales and housing-related activity the main drag. Metro Vancouver retail sales are down 1.1% over the period, owing mostly to the motor vehicle drag, while sales are up 2% elsewhere in B.C. Provincial sales are likely to remain unchanged this year, marking the weakest performance since 2009, although sales declined a whopping 4.5% that year.
The weak trend in retail sales is a troubling signal for consumer demand and, by extension, economic growth, reflecting drag from economic uncertainty, indirect impacts of the slower housing market on related sales and some aversion to debt accumulation on the part of households. That said, excluding vehicle and gasoline sales, year-to-date sales growth was a passable 2%, pointing to support from employment gains and population growth.
B.C.’s beleaguered forestry sector continued to drag on headline manufacturing sales in July. Factory sales declined to a seasonally adjusted $4.35 billion in July, marking a 2.2% (or $96.2 million) drop from June. On an actual unadjusted basis, sales fell 3.3% year-over-year.
Nearly half of the monthly declines owed to a 5.7% decline in wood product manufacturing, with year-over-year sales down 33%. Lumber producers have been hammered by low market prices, lack of timber supply and elevated input costs owing in part to high stumpage fees, which has led to mills shuttering permanently or undergoing significant downtime. Other sectors contributing to July’s dip included fabricated metals (down 7% from June), primary metals (down 2.2%) and food products (down 1.4%). Paper production partly rebounded after an 11% drop in June.
The slump in resources, reflecting the forestry downturn and global economic weakness weighing on mining products, has contributed to a slip in year-to-date sales of 1.2%. Combined forestry products and primary metals sales are down 17%, with remaining sectors up 10%. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
