While retail spending rose across the country in July, consumers in British Columbia spent slightly less than they did in June, according to Statistics Canada data released September 23.
Spending dipped 0.4% to $5.89 billion in the province during the month, driven by lower sales at food and beverage stores and gas stations. Spending increases at new car dealers were not enough to offset those losses.
Year-over-year, however, the province showed the highest increase in the country with growth of 5.7%. This is almost four percentage points higher than the national average increase of 1.8%. The second highest growth for the year was in Ontario, up 4.6%.
Across Canada, retail sales increased 0.5% in July, reaching $43.3 billion. Most of this gain was attributable to a 2% increase in motor vehicle and parts sales, particularly sales at new car dealers, up 2.7%. Sales at food stores fell 0.5%, in spite of sharply increasing food and meat prices.
Robert Kavcic, senior economist and vice-president of economic research at BMO Capital markets, said the report was “decent” and a good indication the Canadian economy continued to rebound in July after contracting in the first half of the year.
“When combined with a strong result in manufacturing, real GDP looks like it should post a 0.2% gain in the month,” Kavcic said in a note to investors. “That would mark a second straight month of growth after the negative early-year run and would leave growth for all of Q3 on pace for something in the 2.5%-to-3% range.”
He pointed out with B.C.’s strong year-over-year retail spending increases, the province is poised to take top spot in overall economic growth in 2015.
TD Economics economic analyst Admir Kolaj pointed out that a retroactive lump-sump universal child-care benefits (UCCB) payment, which started being received around July 20, provided “an added cherry on the top” of retail spending for the month.
“Since the payments began taking place towards the end of the month, the effect is likely to carry forward in the near-term, providing a nice bump of nearly a full percentage point to overall consumer spending in Q3,” Kolaj said. “Incorporating this morning’s release leaves our tracking for GDP growth at around 2-2.5%, annualized, for Q3, which is above the Bank of Canada’s forecast of 1.5%.
“Put together, today’s report is relatively positive and provides further credence to the view that the worst is likely behind us.”
Not all analysts shared this positive view of StatsCan’s latest retail data. CIBC World Markets’ Nick Exarhos said other than some strength in clothing sales (up 2.5%) and sporting goods (up 1.5%), July’s sales were disappointing overall.
“Although more was expected from consumers in supporting a return to growth in Q3, July data suggests that spending isn’t carrying as much momentum into the start of the quarter,” Exarhos said.
“July retail sales disappointed on both the headline reading, which came in a few ticks under expectations at 0.5%, while the ex-autos figure came in half a percent under the street’s view with a flat print.”
The Canadian dollar fell more than four-tenths of a cent on the news, reaching 75.10 cents U.S. as of press time.
