Sun, Nov 29, 2020 @ 04:46 GMT
Home Contributors Fundamental Analysis Canada: Retail Sales Rise Again in September, But Expected to Moderate in...

Canada: Retail Sales Rise Again in September, But Expected to Moderate in October

  • Canadian retail sales continued to improve in September, accelerating to 1.1% month-on-month (m/m), double the growth rate in August and marking a fifth consecutive monthly improvement. This was much better than the Statistics Canada’s preliminary forecast for a flat reading. Looking ahead, the agency’s flash estimate points to a flat reading in October.
  • Stronger growth in sales at motor vehicle and parts dealers (+1.5%) in September – the largest category of retail spending – gave the headline number some extra boost. Spending on gas, by contrast, was little changed (+0.2%) partially due to a slight decline in gasoline prices.
  • Growth in core sales, which exclude those two categories, was also robust, matching the 1.1% increase in the headline print. Looking at the individual components, much of the gains came from higher sales at general merchandise (+1.7%) and food & beverage stores (+0.9%), in the case of the latter the increase was partially due to higher prices for meat, fish and dairy. Sales also picked up (again) at health and personal care stores (1.1%). On the other side of the ledger, sales at stores specializing in sporting goods, hobby and books (-1.6%) continued to ease for the third consecutive month, while sales at clothing stores were flat on the month and remain 12.5% below their year-ago level.
  • After easing for four consecutive months, online sales re-accelerated in September advancing by 8.1% m/m. Compared to a year ago, online sales were up by a whopping 74.3%.
  • Regionally, gains were broad-based, with sales rising in eight out of ten provinces. The strongest gains were seen in New Brunswick (+3.8% m/m) and Prince Edward Island (+4.4% m/m). Sales were also robust in Ontario (+1.0%), Alberta (+2.5%) and British Columbia (+1.7%). The report notes that in Alberta and British Columbia, headline sales were boosted by stronger vehicle sales. Gains were soft in Quebec (+0.2%) and Saskatchewan (0.0%), however, in Quebec sales are still up by a solid 7.7% from a year-ago.

Key Implications

  • Today’s release was a nice surprise, but with COVID-19 situation deteriorating rapidly across much of the country since September, further good news will likely be on hold for now. Indeed, Google mobility data indicates that travel to retail locations has been on a downward trend since about the middle of September. Tighter new restrictions in Manitoba and potentially a second lockdown in some of the hard-hit areas in Ontario does not bode well for in-store spending heading into a busy holiday season.
  • With restrictions being reinstated and non-essential travel discouraged, online sales are likely to get a second wind. Indeed, this was already on display in September. Ditto for other categories such as sports equipment, electronic appliances, health and personal care, which fared well earlier in the pandemic.
TD Bank Financial Grouphttp://www.td.com/economics/
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.

Featured Analysis

Learn Forex Trading