January 22, 2021 | 09:05
Canadian Retail Sales (Nov. 2020) — Strength in the Rearview Mirror
Canadian retail sales jumped a much stronger-than-expected 1.3% in November, led by a broad range of gains and surging online sales. While this is a historical artifact at this point with various lockdowns since put in place (and seasonal spending patterns possibly skewed by the pandemic), it nevertheless highlights the strength of consumer spending heading into the end of the year. From a year ago, retail sales were up a hefty 7.5%, or 13.5% excluding autos and gas stations. The latter is the strongest gain on record by a wide margin.
By sector, food & beverage store spending jumped 5.9%, followed by electronics (+4.5%) and solid gains across sporting goods, building materials and general merchandise. Auto sales and clothing were among the few weak spots in the month. Of course, online sales continue to surge, up more than 75% from year-ago levels.
By region, all provinces but Manitoba posted gains in the month, which is notable because that province was among the early movers with relatively strict second-wave lockdown measures. That could be a preview of what is coming in the data for December and January from some other larger provinces that have since taken similar measures.
Also, note that StatCan’s flash estimate for December wholesale sales was printed at -1.7%, again suggesting that the strength in this report is outdated.
So, where does this leave us? Retail volumes were almost just as strong as the headline, up 1.2% in November, and the consumer shift into goods spending remains a broad theme. That could leave monthly real GDP growth at a solid +0.4%. But, we’re set for a steep decline in December as lockdown measures spread more widely across major parts of the country, and then extended into January. That will likely set 2021Q1 real GDP in the range of -3% annualized.