| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | 1.5% | 0.3% to 1.5% | 1.1% | -0.4% | |
| Year over Year | 1.5% | 0.0% | -0.1% |
Highlights
Canadian retail sales recovered 1.1 percent in January, less than the 1.5 percent rebound expected by forecasters in an Econoday survey. Still, the upward momentum could continue in February, with the advance estimate pointing to a 0.9 percent increase.
Gains were widespread across six of nine subsectors in January, when stronger activity drove the increase as indicated by the 1.0 percent gain in volumes.
The most recent data have been underperforming the Bank of Canada's projections, including a shocking 83,900 plunge in employment in February, lifting the unemployment rate to 6.7 percent from 6.5 percent. We continue to expect the Canadian economy to grow modestly as it adjusts to U.S. tariffs and trade policy uncertainty, but recent data suggest that near-term economic growth will be weaker than anticipated in January, the Bank of Canada said in its policy statement this week, acknowledging soft labor market conditions. The Boc said it was too early to assess the impact of the middle East war on growth.
After declining 1.6 percent in December, motor vehicles and parts rose 2.0 percent in January. Excluding this category, retail sales were up 0.8 percent. When also excluding gasoline and fuel, which declined 0.4 percent, core sales expanded 0.9 percent on the month and 3.9 percent year-over-year. The decrease in gasoline and fuel was entirely due to lower volumes.
The increase in core sales was led by a 3.0 percent gain in general merchandise sales, while the largest decline was in food and beverages, down 0.6 percent.
Regionally, sales were up across all provinces, led by Alberta.
E-commerce sales increased 1.5 percent to C$4.4 billion in January, accounting for 6.2 percent of total retail trade.
Market Consensus Before Announcement
Forecasters agree with Stats Canada’s preliminary estimate calling for sales up 1.5 percent in January.
Definition
Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.
Description
With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.
The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.
Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.