Retail sales recover in November
January 24, 2020
Focus Area—Canadian Economics
The Conference Board of Canada’s Senior Economist Cory Renner offers the following insights on today's Labour Force Survey (LFS):
“Today’s retail sales numbers are a positive development. Retail sales eased through much of the second half of last year, along with both job growth and consumer confidence. These developments put major question marks around how household spending, a large component of Canada’s economy, will progress in 2020. November’s modest uptick in retail sales, coupled with December’s rebound in employment, suggest that consumer spending will continue to expand at a modest pace in 2020.”
- Canadian households seemed tentative entering 2020. Job growth slowed significantly in the second half of 2019 (though jobs did rebound in December). This slowdown eroded consumer confidence to a three-year low in December, putting future household spending at risk.
- Given that household spending accounts for over half of economic output in Canada, how much Canadians are spending directly affects the country’s economic prospects.
- Today’s retail sales release gives an early indication of how household spending fared in the fourth quarter.
- Retail sales values rose by 0.9 per cent in November. However, the rise should be taken with caution – retail sales remain at the second lowest level since June 2019.
- Retail sales growth was strongest in Ontario (+1.6 per cent), Quebec (+1.4 per cent) and British Columbia (+1.1 per cent). Meanwhile, spending was down in Newfoundland (-2.4 per cent), Alberta (-0.9 per cent) and Saskatchewan (-0.5 per cent).
- November’s increase was mostly attributable to sales of motor vehicles, which rebounded following a large drop in the previous month.
Grocery stores also saw a large increase in sales in November. On the downside, clothing stores suffered a decline in sales.