Canadian retail sales continued to grow in October, gaining 0.4% month-over-month. After October’s increase, retail sales are now an impressive 4.5% above its pre-pandemic level.
In volume terms, sales were up 0.2% which will likely help the industry make a contribution to overall GDP growth in the fourth quarter.
While most retail spending categories have rebounded above their February levels, high levels of remote working are keeping a lid on sales of selected products, such as clothing and gasoline. Sales in these categories were down more than 10% below their February levels.
There are many spending categories that are benefitting from the fact that Canadians are spending more time at home. We have seen significant increases in spending on building and gardening equipment, electronics and appliances and cannabis stores.
Signs that new restrictions to combat the pandemic are starting to impact spending were evident in today’s release. Statistics Canada’s flash estimate for November showed retail sales are likely to have been flat last month. Furthermore, sales fell in Ontario, led by declines in Toronto, as virus cases increased and Toronto, Peel and Ottawa were moved to modified Stage 2 restrictions in early October.
When we look at the composition of growth in October there is evidence that gains are slowing. Only 6-of-11 subsectors posted growth, representing around half of all retail sales categories. When you exclude motor vehicles and parts from retail spending, there was no growth in spending due to declines in food and beverage stores, clothing and footwear, electronics and appliances and gasoline stations.
Overall, the slowing evident in the retail trade sector aligns with our most recent economic outlook (https://www2.deloitte.com/ca/en/pages/finance/articles/economic-outlook.html) which calls for economic growth to slow substantially in the fourth quarter of this year with weakness persisting into the first quarter of the new year.
Categories: Canadian Economic Outlook, E-Sight, Economics
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