- Canadian retail sales advanced 1.1% (m/m) in March, following a 1% increase in February (previously reported as 0.8%). The release came close to consensus expectations for a 1.2% increase.
- After stripping out price movements, the picture was less impressive, with volumes up a modest 0.3%.
- The sectoral composition of the gains was decent, with 7 out of the 11 sectors recording a gain. Sales at gasoline stations (+6%) drove a large chunk of the overall increase, on the back of increased gasoline prices. Sales were also positive at clothing stores (+3.4%), and encouragingly, at furniture and home furnishing stores (+3.3%) and building material and garden equipment stores (+4.3%). Providing some offset were lower sales at motor vehicle and parts dealers (-0.7%).
- Regionally, 9 provinces saw retail sales increase. The increase was mostly driven by Alberta (+2.4%), Ontario (+0.8%), and Quebec (+0.7%). Manitoba was the only province that saw retail sales decline in March (-0.7%).
Key Implications
- March’s retail sales increase was not sufficient to change an overall poor Q1 performance, which ended with nominal retail sales up a modest 0.1% and volumes down 0.1%. Like other recent data releases, the March uptick points to improving momentum heading into Q2. Additionally, some details in the report, including an increase in clothing and housing-related retail sales (both in nominal and real terms), and the broad-based composition of the gains, point to a potentially improving domestic demand picture heading into the next quarter.
- The modest volumes uptick and the minor revisions to February’s data have, on their own, little impact on our Q1 growth tracking. That said, Statistics Canada’s data on investment in building construction (released yesterday) casts doubt on residential construction’s performance this quarter, adding another sign that the Canadian economy likely struggled to eke out any overall growth at the start of the year.
