TORONTO — Nominal Canadian retail sales dipped 0.6 percent in February following a 2.3 percent surge in January. Weakness was concentrated in motor vehicle sales and a price-led drop in gasoline station receipts, RBC Economics reported.
Sales volumes inched just 0.1 percent lower after a 1.4 percent jump in January. Much of the dip in Canadian retail sales in February reflected a price-led drop in gasoline station receipts as gasoline prices fell sharply in February, said Nathan Janzen, RBC senior economist.
A 1.8 percent drop in motor vehicle and parts sales contributed to the drop; however, that is unlikely to be repeated in March given unit sales inching higher in that month from already elevated levels.
Excluding those components, sales were up 0.5 percent to build on an outsized 2.4 percent jump in January. Overall sales in volume terms inched 0.1 percent lower but following a large jump in January are still up a solid 4.5 percent (annualized) on average in the first quarter to-date, said Janzen.
“Moreover, the headline retail sales numbers exclude much of e-commerce sales for which Statistics Canada just began collecting data a year ago,” he explained. “Headline nominal retail sales have averaged a solid 4 percent above year-ago levels over January and February but e-commerce sales are up a whopping 34 percent on average over the same period.
“Employment gains have been solid, consumer confidence has strengthened sharply year-to-date in 2017 and interest rates remain extremely low all of which is consistent with a solid fundamental consumer spending backdrop,” said Janzen. “Even with the modest dip in February retail sales, there is little to suggest that underlying consumer spending trends are weakening from levels that already accounted for a record share of gross domestic product in 2016.”
SOURCE: RBC Economics press release