Shoppers in Canada spent a total of $44.9 billion on retail goods in December, which is a decline of 0.5% compared with November, Statistics Canada announced February 22.
The biggest contributor to the decline was a 9% drop in sales of motor vehicles, but even excluding autos, retail sales fell 0.3% in the month.
Declines were broad-based. Spending fell in health and personal care stores (down 4.1%), clothing stores (down 3.7%) and liquor stores (down 3.6%). Only sales at gasoline stations (up 6.6%) and building materials (up 0.7%) increased in the month.
Overall, however, the outlook is still good, as this report comes on the heels of four solid months of strong economic data, said TD economist Diana Petramala.
“Despite the pullback, the consumer remained a main driving force for Canadian economic activity in the fourth quarter of 2016,” Petramala wrote in a note to investors.
“Motor vehicle sales are still near record high levels – a good sign that Canadian consumers are feeling pretty optimistic about future employment and income prospects.”
In B.C. alone, shoppers spent $6.3 billion on retail goods in the month. This is down 0.3% compared with November. Year-over-year, B.C. had the strongest gain in spending, with sales up 7.2% compared with December 2015. This was almost three percentage points higher than the national year-over-year increase of 4.3%.
BMO senior economist Benjamin Reitzes said although December retail sales across Canada came in much lower than expected, part of the weakness in the month is because shoppers did a portion of their holiday shopping early. The popularity of Black Friday has increased in Canada as many more retailers north of the border look to cash in on the trend by offering discounts in November.
https://www.biv.com/article/2016/11/vancouver-stores-look-cash-black-friday/
“There’s no denying this is a soft report,” Reitzes said. “But given the apparent seasonality and the fact that the drop in volumes comes after a very strong run, it doesn’t change the broader story that the economy is performing better than most thought just a few months ago.”
The Canadian dollar weakened on the news of December’s drop in retail sales. As of press time, the loonie was trading around 75.7 cents U.S., which was down close to three-tenths of a cent.
@EmmaHampelBIV
