Retail sales declined for a second consecutive month in October, slipping 0.2% month-on-month (m/m), undershooting Statistics Canada’s advanced estimate for a flat reading. After adjusting for inflation, sales volumes fell a steeper 0.6% m/m.
Auto sales partially reversed September’s losses, rising 0.6% m/m in October.
Receipts at gas stations and fuel vendors fell 0.8% m/m, driven by weaker demand, with volumes also down 0.9% m/m.
Core sales – excluding auto sales and receipts at gas stations – were weak for a second straight month, declining 0.5% m/m.
- Weakness was concentrated in food and beverage stores (-2.0% m/m) with more than a 10.6% drop at beer, wine and liquor retailers coinciding with a labour dispute in British Columbia. Sales at clothing and clothing accessories (-0.7% m/m) and health and personal care stores (-0.3% m/m) also fell in October.
- Gains at furniture, home furnishings stores (+2.3% m/m) partially offset the weakness.
E-commerce sales declined by 0.3% m/m in October.
Statistics Canada’s advanced estimate points to a rebound with 1.2% gain in November.
Key Implications
The holiday shopping season got off to a flat start. Despite November’s rebound, the underlying trend in real sales remains negative. Only a handful of discretionary categories – clothing and electronics – continue to show positive momentum. This lines up with our TD credit & debit card data, which show relatively resilient services spending growth outpacing goods
Looking ahead, our outlook for Q4 real consumption growth remains subdued, tracking close to 1.0% (quarter-on-quarter, annualized). This below-trend pace is consistent with the Bank of Canada’s assessment that the economy is still working to gain traction and that monetary policy is appropriately positioned.
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