B.C. retail spending remained robust in February, holding steady after a January surge. However, sharp increases in gasoline prices and higher vehicle sales underpinned the latest gain.
Total sales were unchanged at a seasonally adjusted $8.22 billion but remained 12% above year-ago levels. Based on our calculation, gas station sales rose 10% from January owing to higher prices but down 6.5% from a year ago.
Sales continue to be limited by a scarcity of commuters as employees work at home. Meanwhile, motor vehicle sales rose 6.5% from January and 17.5% from a year ago. Public health fears have boosted demand for private vehicles.
B.C.’s increase trailed the national monthly increase of 4.8% as other provinces relaxed measures temporarily following the second wave, but year-over-year growth is significantly lower at 6%.
In other retail segments, sales slipped but continued to exceed year-ago levels by a wide margin.
Year-over-year, retailers of electronics, appliances, building materials and garden supplies recorded 33% increases in year-over-year sales due to residents working at home, and an exceptionally active housing market. General merchandise sales rose about 3% and grew 10% from a year ago. Clothing retail remained soft with sales down 2% from January and 15% from a year ago.
The third wave of the pandemic led to modest tightening of restrictions in B.C. in April, but the effect on retail goods demand is likely to be modest, with the impact largely limited to services. Statistics Canada’s preliminary estimate for March is for a 2.3% monthly national increase.
Small and medium-sized business confidence in B.C. improved for a fourth straight month in April and bested most provinces in April. The latest Canadian Federation of Independent Business long-term Business Barometer Index came in at 69.4 points, up from 67.5 points in March and the highest since early 2018. With a demarcation value of 50, more businesses are optimistic about market conditions over the coming 12 months.
Nationally, the index declined nearly five points to 63.4 points but this almost entirely reflected pessimism in Ontario, which fell 10 points. This is not surprising given the effects of the COVID third wave and severity of restrictions including a stay-at-home order. •
Bryan Yu is chief economist at Central 1 Credit Union.
