Canadian retail sales finished off the last month of summer on a positive note, rising 2.1% in August. However, the momentum was short-lived, as preliminary data for September suggests an increasing number of consumers are spending more on services rather than goods.
On Friday, Statistics Canada reported that retail sales rose to $57.2 billion in August, after declining by a revised 0.1% in the month prior. Sales were up across 9 of the 11 subsectors, while core retail sales— which do not account for sales at gasoline stations or motor vehicle and parts dealers— rose 2.7%.
An increase in sales of 4.8% at food and beverage stores led August’s overall rise in retail sales, followed by sales at clothing and clothing accessories stores, which were up 3.9% and reached the highest level on record. Retail sales at building material and garden equipment and supplies dealers gained 2.8%, after reaching a record-breaking level in March 2021 which was subsequently followed by four straight months of declines.
For the fourth consecutive month, sales at gasoline stations increased yet another 3.8% in August, amid rising fuel prices. On the other hand, though, sales at motor vehicle and parts dealers slumped, falling 4.2%. Similarly, sales at new car dealers also fell flat that month, as inventories remained low due to the ongoing global semiconductor shortage.
However, according to Statistics Canada, August’s jump in retail sales was short-lived, because preliminary data for September shows that sales slumped 1.9%, suggesting that Canadian consumers have pulled back from spending on goods, and are instead diverting their income towards the services sector, which for most of the year was subject to pandemic-related restrictions.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
