October 21, 2020 | 08:59
Canadian Retail Sales (Aug. 2020) — Simmer Down
Canadian retail sales rose 0.4 % in August, weaker than expected, but with upward revisions to the prior month. That leaves overall sales activity up 3.5% from year-ago levels, and 1.8% above pre-COVID (February) levels. On a year-to-date basis, sales are still down 5% through August, but stripping out gas stations leaves spending down a more modest 3.5%. Excluding autos as well (which are back to early-2020 levels now, but still have a big hole to fill from early in the pandemic), sales are up 1.8% through August. Of course, the pandemic has also dramatically accelerated the shift into e-commerce sales, with spending in that segment up a massive 69% y/y through August. That said, e-commerce sales have faded month-over-month through the summer as storefronts have reopened.
The flash estimate for September suggests that sales momentum continued to fade into the fall, with StatsCan estimating flat overall sales in the month.
The sector results were mixed, with auto sales up 2.4%. Gas station receipts rose 1.2%, leaving sales excluding autos and gas up a modest 0.4%. Strength at building materials and grocery stores was tempered by modest declines in furniture, electronics, clothing and sporting goods.
Regionally, Atlantic Canada posted some of the strongest month-over-month gains, while Alberta and Manitoba lagged with 1.6% declines. From a year ago, all but Alberta (-0.6%) saw growth, with Manitoba (+8.4%) and Quebec (+7.3%) at the top of the pack.
In volume terms, sales were up a moderate 0.4% in August. That leaves volumes up 3.3% from a year-ago, but still down 5.4% y/y through August. With that in mind, it still looks like real GDP can post 1% growth in August, as StatsCan initially estimated, but there might be a bit of downside risk.
The Bottom Line: Consumers continue to drive the recovery, with limited availability of services and travel at least partly redirected into goods spending. But, with a lot of pent-up demand and lifestyle-adjustment spending seemingly running its course, this momentum could be tougher to sustain in the quarters ahead.