Canadian Retail Sales (November 2022)

Ksenia Bushmeneva, Economist | 416-308-7392

Date Published: January 20, 2023

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Retail Sales Edged Lower in November but Poised to Increase in December 

  • Retail sales edged lower by 0.1% month-on-month (m/m) in November, a better outturn than Statistics Canada's advance estimate for a 0.5% drop. Adjusting for the impact of inflation, the volume of sales was down 0.4% on the month.  
  • Statistics Canada's advance estimate for December indicates a 0.5% m/m gain. Our internal card spending data also points to higher spending in December.
  • November was a good month for gas stations and car dealerships. Receipts at gasoline stations increased by 2.2% m/m, entirely on account of more driving and higher sales volumes (+3.7% m/m) since gas prices actually fell by 3.6% in that month. Sales of motor vehicle and parts rose by 1.4%, led by higher sales at new car dealerships (+1.2%).
  • Core sales, which exclude autos and gasoline, were much weaker than the headline, falling by 1.1% in November.
    • Lower sales at food and beverage stores (-1.6%) as well as at building materials and garden equipment stores (-3.8%) led the decline. Performance was also soft at another housing-related category – furniture and home furnishings (-0.2%). Sales declined at sporting goods, hobby and book stores (-1.5%), general merchandise stores (-0.8%) and miscellaneous retailers (-2.0%).  
    • Electronics and appliance stores (+0.9%), personal and health stores (+0.5%) and clothing & accessories stores (+0.3%) were the only categories bucking the weak trend in November. 
    • E-commerce sales were down 2.7% m/m, marking the third consecutive monthly drop, and were 3.5% lower than a year ago.     

Key Implications

  • Outside of spending more on gas and new cars, consumers took a breather from shopping in November, perhaps waiting for discounts and building up some financial cushion ahead of a spending-heavy December. Indeed, Statistics Canada flash estimate suggests that retail sales have rebounded in December. This is in line with our internal debit and credit card  aggregate spending data, which also points to an increase in consumer spending in December. A sizeable drop in gasoline prices last month could have given consumers a much-needed break, leaving more cash to spend on gifts. 
  • Even as consumers appear to have kept on spending through December, they will likely need to tighten their belts this year. As we note in our latest forecast, we expect that as 2023 unfolds, consumer spending will likely edged lower in the second half of the year amid escalating debt servicing costs, which will take a bite out of discretionary spending.