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Economy in Brief


Canadian Retail Sales Are On A Roll
by Robert Brusca March 22, 2010

Canadian Retail sales rose a sharp 0.7% in January. Deflated by the CPI the retail sales rise comes back to a still respectable 0.4% gain. The year-over-year plot in the chart shows the acceleration in nominal retail sales is slowing. And that sort of thing is inevitable as growth rates climb. But it is also inevitable as recovery progresses and the recession gets pushed farther into history. In January the Yr/Yr gain is marked from January a year ago when sales rose by 1.7%. The December base for the year –over-year calculation is December 2009 when retail sales fell by 5% month-to-month. No wonder there is a noticeable backtracking there in the Yr/Yr rate of growth!

But the shorter sequential growth rate progression ( 3-M, 6-M 12-M) demonstrates that nominal sales growth has actually cooled over the past three-months compared to the 6-M and 12-M pace. On closer inspection that seems to have more to do with inflation as CPI-deflated retail sales accelerated to 3% over 6-months from 0.9% over 12 months and then to 3.9% over three months compared to six months. In the new quarter (2010-Q1) sales are rising at a 3.7% annual rate so the stronger growth rate seems to be mostly holding up.

The nominal sales data also show much more momentum in sales with motor vehicles excluded. The evidence there is of much stronger consumer spending in train. Retail less MV sales have accelerated from 5.5% over 12-months to 7.9% over 6-months to 10.1% over three months. In the current quarter the pace for sales is an even stronger 14%.

So there are various ways to assess the Canadian consumer. For the most part the consumer seems to be back to the store had shopping with gusto. Of course the Olympic Games came to Canada in February and so there could be a further boost to these figures at that time with the influx of tourists. For the moment, without the Olympic effect Canada’s consumers appear to be back on a spending path. Only auto purchases are lagging.

Canada Retail Sales
  Mo/Mo Saar New QTR
Nominal % Jan-10 Dec-09 Nov-09 3-Mo 6-Mo 12-MO Yr-Ago Saar
Total RTL 0.7% 0.5% -0.4% 3.5% 6.0% 6.0% -6.3% 5.7%
New Car Dealers -2.3% -0.4% -2.3% -18.2% -0.6% 10.6% -19.5% -18.3%
Supermarkets 2.0% -0.7% 1.0% 9.6% 4.6% 0.7% 8.2% 11.7%
Clothing Stores 0.2% 1.5% -2.5% -3.5% 1.3% -0.7% -3.0% 1.9%
Retail less MVs 1.8% 0.7% 0.0% 10.1% 7.9% 5.5% -3.0% 14.0%
CPI defalted Retail 0.4% 0.0% 0.5% 3.9% 3.0% 1.9% 1.1% 3.7%
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