January 21, 2022 | 09:05
Growth, For Now
Canadian retail sales grew 0.7% in November, less than the 1.2% flash estimate. Sales increased in six of eleven sectors, led by gas stations (+4.9%), partly due to higher prices; building materials (+3%); and food and beverage stores (+1%), led by grocery stores. Sales at motor vehicles and parts dealers declined 0.3%—excluding autos, retail sales grew 1.1%, while ex. autos & gas posted a smaller 0.5% gain.
More interesting is that StatCan's early estimate for December retail sales calls for a 2.1% drop. Given the higher caseloads and tighter restrictions in the second half of the month, a decline of that magnitude (relatively similar to the U.S.) is not surprising. Fears of inventory issues might also have pulled forward some holiday sales, weighing on December.
Regionally, seven of ten provinces posted gains, led by Quebec (+1.2%). Sales in B.C. managed to grow 0.8% despite the flooding in the month. StatCan noted that 21% of respondents said they were impacted by floods in B.C. and the Atlantic provinces.
Retail volumes grew a smaller 0.2% in November as inflation remained elevated in the month. With wholesale and manufacturing sales already in hand, it looks like November GDP could still post positive growth, though the flooding poses downside risk.
Key Takeaway: Retail sales managed a decent gain in November, though much of it was due to higher prices as inflation erodes purchasing power. Tighter restrictions look to have clamped down on spending in December—consumers appear ready and willing to spend, but they can only do so when allowed.