Quick Take

Retail sales fell in January due to new limits on economic activity

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The Conference Board of Canada’s economist Kiefer Van Mulligen offers the following insights on today's release of retail trade data:

Today’s Statistics Canada release showed that retail sales fell 1.1 per cent in January, following a 3.7 per cent decline in December. This drop was almost entirely due to lower retail activity in Ontario and Quebec. In both provinces, January brought curfews, stay-at-home orders, and other restrictions on economic activity. Though many of these restrictions remained in place into February, Statistics Canada’s preliminary estimate suggests that retail sales grew by 4 per cent last month.

  • Taking into account price changes, total sales volumes fell 1.6 per cent in January.
  • Despite their second consecutive monthly decline, retail sales remain above their pre-pandemic level posted in February 2020. Retail sales last year saw remarkable growth entering the summer months.
  • Retailers fared differently across the country, with Manitoba’s sales growing by 15.6 per cent. Prince Edward Island’s retail sales also saw strong upward movement, expanding by 8.7 per cent in January. Quebec posted the largest decline at 9.8 per cent, with Ontario dropping by 2.6 per cent.
  • Following the Christmas holiday season, and despite being essential businesses, sales at grocery stores and supermarkets posted monthly declines in January (-1.7 and -1.9 per cent, respectively).
  • However, sales at specialty food stores (10.5 per cent) and beer, wine and liquor stores grew month-over-month in January (4.1 per cent).
  • Sales fell in six of 11 subsectors. Falling by 17.8 per cent, clothing and clothing accessories stores posted the largest decline. Sporting goods, hobby, book and music stores also declined sharply (-16.8 per cent).
  • General merchandise stores posted the largest growth in January (3.3 per cent), while building material and garden equipment and supplies dealers also jumped (2.9 per cent).
  • Sales volumes declined at gasoline stations (-1.2 per cent) but higher prices resulted in sales values rising by 0.9 per cent.
  • Ecommerce has taken up a growing share of retail sales as Canadian’s have changed their shopping behaviour since the pandemic began.
  • With restrictions still in place, January was no exception. On a seasonally adjusted basis, ecommerce sales grew by 15 per cent month-over-month.
  • Statistics Canada’s flash estimate for February suggests that retail sales rebounded and grew by 4 per cent. In our latest national forecast, we expect retail sales to fall by 3.4 per cent in the first quarter of this year. However, we anticipate quarter-by-quarter growth in retail sales for the remainder of the year.

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Kiefer Van Mulligen

Kiefer Van Mulligen

Economist

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