Canadian retail sales up in August but miss expectations

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Canadian retail sales rose by 0.4 per cent in August, driven primarily by higher sales at motor vehicle and parts dealers, according to Statistics Canada’s latest report.

Sales increased to $66.6 billion but were up in only four of the nine subsectors, and fell below the projected headline gain of 0.5 per cent. Motor vehicle and parts dealers led substantially with a 3.5 per cent increase, with sales of new cars up 4.3 per cent and used cars up 2.1.

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Ontario had the largest provincial increase with a 0.9 per cent rise, mainly attributed to auto sales. In Toronto, sales rose 0.6 per cent.

Without motor vehicle and parts dealers, core retail sales actually decreased for the first time in three months, dropping to 0.4 per cent in August. This decline was led by lower food and beverage sales, which were down 1.5 per cent.

“While Canadian retail sales posted a further solid headline gain in August, the advance was largely driven by often volatile auto sales and core measures looked much less impressive,” Andrew Grantham, senior economist at Canadian Imperial Bank of Commerce, said in a note.

Alberta was the province most affected by the decline in food and beverage sales, which dropped by 1.1 per cent.

Sales of building material, garden equipment and supplies declined for the second consecutive month. This downward trend will harm residential investment, noted Bradley Saunders, assistant economist at Capital Economics.

The core retail categories that had the largest increase in sales in August were sporting goods, hobby, musical instrument, book, and miscellaneous, which rose 0.9 per cent.

Though retail sales were lower than projected and largely supported by auto sales, Statistics Canada estimates September’s numbers will increase 0.4 per cent.

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