B.C. retailers posted another month of increasing sales in September that contrasted with a decrease nationally.
Dollar-volume retail sales climbed for a second consecutive month to $5.96 billion, marking a 0.2% gain from August. Despite slower growth from the previous month, retail momentum remained robust. In comparison, national sales fell 0.5%, due in large part to contractions in Quebec, Alberta and Ontario.
September’s gain added to an already strong year for retailers. Year-over-year growth of 6% during the month pushed year-to-date growth to 7%, which has far outpaced a 2.1% national gain. Metro Vancouver has accounted for just under half the gain, posting a year-to-date increase of 10.5%, compared with 4% in the rest of the province.
Strong retail sales reflect positive economic and employment growth and solid consumer confidence in B.C. The economy is likely to grow by more than 3% this year, as low interest rates drive housing activity and demand for durable goods and a low Canadian dollar boosts tourism and export demand.
Retail sales have reflected these patterns with 9.3% year-to-date growth in auto-related sales, 15% growth in furniture and furnishings and a 24% gain in building materials, gardening equipment and supplies. The only drag is gasoline sales, which reflect lower prices at the pump than a year ago.
While some of the gain could reflect higher import prices due the low Canadian dollar, the outperformance compared with national sales and a flat national retail price index suggest higher real demand and sales. Central 1 forecasts full-year retail sales growth of close to 5% in both 2015 and 2016.
B.C.’s manufacturing sector growth, meanwhile, held its head above water in September, albeit just barely, compared with deterioration in the national performance. Manufacturing sales in the province increased 0.2% from August to $3.64 billion. While this was below year-ago levels by 0.6%, growth compared favourably to the rest of the country. National manufacturing fell 1.5% from August.
While activity is below early-year highs, B.C. manufacturing continues to hold steady with a mild upward trend since mid-year, signalling improved export demand. Year-to-date, dollar-volume shipments were up 3%, while national sales fell 1.4%. The key growth sector is food manufacturing, which is up 11% and accounts for about 60% of overall manufacturing gains.
Upward momentum in manufacturing is anticipated to continue as a positive U.S. growth cycle and low Canadian dollar induce higher export activity. Real manufacturing output is forecast to rise 4% this year and 3% in 2016.
Bryan Yu is senior economist at Central 1 Credit Union.
