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Retail sales rise in September, but gains likely slowed in October

Ottawa, November 20, 2020—The Conference Board of Canada’s Senior Economist Richard Forbes offers the following insights on today's retail trade data:

“Today’s Statistics Canada release showed that retail sales rose 1.1 per cent in September. Strong gains in household income—due largely to government stimulus during the pandemic—and historically low interest rates have been encouraging sales of big-ticket items. Despite September’s upbeat results, preliminary estimates indicate that retail trade was flat in October, in line with our expectation that the Canadian economy’s recovery will slow during the final months of 2020.”


  • Retail sales rose 1.1 per cent in September compared to the previous month.


  • Sales rose in nine of 11 subsectors. The largest gains were at furniture stores, where sales rose 4.5 per cent. Meanwhile, sales at motor vehicle and parts dealers rose a solid 1.5 per cent.


  • Strong gains in household income and rock bottom interest rates are encouraging consumers to purchase big-ticket items like furniture and vehicles.


  • After falling in August, sales at food and beverage stores rose 0.9 per cent in September. Considering that the segment accounts for over one fifth of all retail trade, the gains were a key driver of the aggregate results.


  • Although sales at sporting and hobby stores fell 1.8 per cent, they are up a healthy 4.5 per cent on a year-over-year basis and reached historic highs in June. This supports the notion that demand for fitness equipment has risen sharply since the pandemic began.


  • After taking into account price changes, total sales volumes also rose 1.1 per cent in September.


  • Sales rose in eight of 10 provinces, with P.E.I. and New Brunswick posting the largest gains. Meanwhile, sales fell modestly in Nova Scotia and Saskatchewan.


    The pandemic has continued to encourage many Canadian households to purchase goods online rather than in-store. As such, retail e-commerce sales continued to surge in September, reaching $3.2 billion, or 5.6 per cent of total retail trade. Year-over-year e-commerce sales were up an astonishing 74.3 per cent in September.


  • Preliminary numbers released by Statistics Canada suggest that retail sales were flat in October.


  • This morning’s release supports our view that Canada’s economy posted a strong bounce back in the third quarter of 2020, but that the economic recovery will slow over the next few quarters.


  • Looking further ahead, we expect economic growth will pick up sharply in the second half of 2021, though our forecast is contingent on widespread availability of a COVID-19 vaccine by next summer.


  • Recent news surrounding the development of a vaccine suggests that a strong second half to 2021 is still a possibility although there are significant risks of delays should there be difficulties obtaining or distributing the vaccine.

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