Canadian Retail Sales Still Spur Overall Growth

Canadian retail sales advanced by 0.2% in August. That rise was on the heels of a 0.5% rise in July. Still, the large drop in sales in June means that the sales performance over the last three months has been poor, logging a 0% growth rate.

Over the past three months clothing sales have been strong, up at an 8.6% annual rate. That rise was blunted by a 6.9% annual rate of decline at new car dealers and a 2.3% drop at supermarkets. As a result the overall sales performance over the month was flat with inflation adjusted or real retail sales dropping at a 26% annual rate.

Real sales are following a somewhat irregular path. The current real and nominal pace of sales is below its year-over-year value. But on both the real and nominal measures sales are sharply lower over three months; they are either flat or declining compared to relatively strong growth over six months. This complicates the interpretation of the path of retail sales.

However, in the quarter to date (two months into the third quarter) the trends are positive. Nominal retail sales are growing at a strong 4% pace while real retail sales are up at a 1.5% annual rate. Thus, the slowing in sales over three months is due to weakness several months ago. As we saw in the table, retail sales are up in each of the last two months in both real and nominal terms. Canada still appears to be getting growth support from retail sales.