Retail Sales in Canada: November Update

By Promit Mukherjee

OTTAWA (Reuters) – Canada’s retail sales remained flat in November as consumers bought less from supermarkets, grocery stores, alcohol outlets, and furniture shops. However, the overall numbers were buoyed by a rise in car sales, according to data released on Thursday.

Analysts surveyed by Reuters had anticipated a 0.2% increase in retail sales, with a 0.1% rise expected excluding the automotive sector for the same month.

Excluding the automotive sector, sales dipped by 0.7%, as reported by Statistics Canada. Retail sales serve as an early indicator of Gross Domestic Product (GDP) growth and account for nearly 40% of total consumer spending, which played a major role in keeping Canada’s economy afloat in the third quarter.

The GDP figures for November will be published at the end of this month.

Despite total retail sales amounting to C$67.57 billion ($46.96 billion), the numbers reflect a decline across multiple sectors, with six out of nine subsectors reporting reduced purchases.

Economists, however, perceive November’s numbers as an anomaly. Shelly Kaushik, a senior economist at BMO Capital Markets, noted in a report that a late Black Friday and the mid-December initiation of the GST/HST (sales tax) holiday led many consumers to hold off on spending during the latter part of the month.

Consumer spending increased in the second half of last year as interest rates fell, which is expected to continue this year, though the potential for a unilateral U.S. tariff poses a significant risk.

The Bank of Canada is set to announce its monetary policy decision next week, with money markets suggesting an 83% chance of a 25 basis point cut to 3.0%.

The Canadian dollar traded down 0.08% to 1.4387 against the U.S. dollar, equating to 69.51 U.S. cents.

Preliminary estimates for December’s retail numbers indicate a possible 1.6% increase, based on surveys from half of the respondents, according to Statscan.

Sales in food and beverage sectors, the second largest contributor to retail sales, fell by 1.6% month-over-month. The third-largest sector, general merchandise retailers, experienced a 1% decline in sales.

Overall, retail sales dropped by 0.4% in volume terms. Most of the sales decline was offset by an increase of 2% in sales at motor vehicle and parts dealers, which is the largest retail sales category in Canada. This surge was driven by consumer demand for new cars, as Statscan indicated.

($1 = 1.4388 Canadian dollars)