Article content
Higher sales of motor vehicles helped push Canadian retail sales for October up by 0.7 per cent on a monthly basis to $66.9 billion, but economists say the outlook doesn’t look as positive.
Despite the growth rate in Statistics Canada’s metric that tracks consumer demand for finished goods, the figure was slightly lower than the 0.8 per cent expected by most economists.
Article content
Overall sales were up in seven of the nine industries assessed by the agency, including furniture and appliances, food and beverage, general merchandise, health and personal care and clothing retailers. In terms of volume, sales rose by 1.4 per cent, which is the largest monthly increase since December 2022.
“Canadian consumers have been in the festive spirit this holiday season, having broadened their spending across several categories,” Maria Solovieva, an economist at Toronto-Dominion Bank, said in a note to clients on Dec. 21. “Looking ahead, auto sales are tracking strong and our own card spending estimates point to a higher reading in November.”
But the positive retail numbers belie Canada’s struggling economy. Gross domestic product (GDP) shrank 0.3 per cent in the third quarter due to a decrease in exports, flat household spending and decreased business investment in certain sectors.
Retail sales in October were up in nine provinces, with Ontario enjoying the largest growth. Alberta was the only province where retail sales decreased — by 0.2 per cent — primarily because of lower food and beverage sales.
Article content
Economists are cautious on future retail sales given that Statistics Canada said they are expected to be relatively unchanged in November.
“This pick-up in spending is likely to prove temporary,” CIBC Capital Markets economist Andrew Grantham said in a note on Dec. 21. “A weaker labour market, combined with the continued impact of high interest rates, will likely see Canadian consumer spending weaken again in the first half of 2024.”
Solovieva also expects spending to drop early next year.
“While improved spending patterns during the holiday season have hit a high note, it’s uncertain if this harmonious rhythm will play on in the same key into the new year,” she said.
BMO Financial Group economist Shelly Kaushik described the latest retail sales numbers as a mixed bag.
“Indicators of weakness for November suggest consumer spending could slow meaningfully in the rest of the fourth quarter,” she said.
Related Stories
A separate report released on Dec. 21 by Statistics Canada said the number of employees receiving pay and benefits from employers decreased by 44,600, or 0.2 per cent, in October. But the number of job vacancies — 633,400 — didn’t change much from September.
Payroll employment declined in 11 sectors, including manufacturing, construction, retail trade and accommodation and food services. Monthly gains though were recorded in health care and social assistance, and public administration.
As a result of the further weakening in the Canadian labour market, consumer spending ahead will likely be hampered, Grantham said.
• Email: [email protected]
Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.
Share this article in your social network
