Retail sales declined by 0.1% month-on-month (m/m) in February, coming in weaker than Statistics Canada’s advance estimate for a 0.1% gain. January’s print was unchanged at -0.3% m/m.
Adjusted for inflation, the volume of retail sales was down 0.3% in January after two months of gains.
Sales at motor vehicle and parts dealers rose by 0.5%, erasing some of last month’s losses. According to industry estimates, March is trending positive for auto sales.
Sales at gas stations were down 2.2% m/m despite higher prices at the pump.
Excluding auto sales and receipts at gas stations, core retail sales were flat on the month. In volume terms, receipts at gas stations were down by 3.9%.
- The biggest losses were reported at electronics and appliance stores (-2.8% m/m) and clothing and clothing accessories stores (-1.0% m/m).
- Offsetting these losses were gains at general merchandise stores (+1.1% m/m).
E-commerce sales (not included in the headline tally) were up 1.9% m/m in February.
Statistics Canada’s advance reading suggests that retail sales were unchanged in March (with almost 62% of companies surveyed providing responses).
Key Implications
Today’s decline in retail sales for February was more widespread than what we saw in January, reflecting weaker-than-expected performance in core measures and underscoring the challenges facing consumers amid rising costs of living and financing. Despite the overall softness, auto sales emerged as a bright spot, demonstrating their usual roly-poly resilience by bouncing from the previous month’s decline. In addition, our internal credit and debit spend data point to an expansion in both goods and services spending in March, keeping our real consumption tracking in the range of 2.8% to 3.0% for the first quarter of 2024.
Relatively solid spending momentum has been supported by a still-sizeable excess deposits, robust population growth and a wealth effect. However, with the labour market losing steam, income growth is likely to moderate, dictating a slower pace of spending. .
