Retail sales rise as Canadian economy gains momentum ahead of Wave 5

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Households appear eager to shop: sales increased 1.6% from September to $ 57.6 billion, second highest on record

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Retail sales rebounded in October, further evidence that the Canadian economy will face the fifth wave of COVID-19 infections with decent momentum.

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Sales rose 1.6% from September to $ 57.6 billion, the second highest on record, Statistics Canada reported on December 21. up to demand.

Overall, seven of the 11 broad categories measured by Statistics Canada posted gains, a solid rebound from the previous month, when retail sales fell 0.3%. In volume, sales increased 0.9 percent, compared to a 1.1 percent decline in September. Core retail sales, which exclude gasoline stations and auto and parts dealership revenues, rose 1.5% in the month.

Demand appears to have held steady in November, as preliminary data suggests retail sales rose 1.2 percent, according to Statistics Canada.

“The consumer is ready and willing to spend,” Douglas Porter, chief economist at Bank of Montreal, said in an interview. “But we all hold our breaths on (Omicron) to see how far the economy is going.”

The consumer is ready and willing to spend

Douglas porter

It seems likely that sales in December and January will be affected by tighter health restrictions aimed at slowing the spread of the latest variant of COVID-19. The number of cases in some provinces has more than doubled in the past week. Quebec became the first province to start shutting down parts of the economy on December 20, closing gyms, cinemas, bars and schools. Ontario, the most populous province, also adopted new capacity restrictions and new shutdown times.

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However, if stores remain open or if retailers are successful in convincing consumers to shop online, sales could hold up. Figures for October suggest households are keen to shop. New car sales increased nearly 3% from September, while overall sales at auto and parts dealers increased 2.2%.

Still, auto sales remain relatively weak, suggesting that supply remains an issue. “If we compare it to two or three years ago, auto sales are still very low and it’s not because the demand isn’t there,” Porter said. “It’s because the supply is not there.”

The pandemic has caused shortages of major inputs, especially computer chips. Supply is improving, but problems remain.

Sales growth coincides with inflation hitting a three-decade high this fall. The consumer price index rose 4.7 percent at the start of the fourth quarter, a figure not seen since 1991. Inflation mainly concerns energy prices and housing costs, but the prices of homes. goods are also increasing. Inflation for passenger vehicles reached 6.1% in October, while parts, accessories and supplies rose 3.6% from the previous month.

  1. Wages grew twice as fast as inflation in industries with the most job vacancies, according to Statistics Canada.

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  2. Bank of Canada Governor Tiff Macklem said in an interview with Financial Post Editor-in-Chief Kevin Carmichael that further supply disruptions could fuel inflation further.

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  3. The Canadian Real Estate Association said this week that housing prices in Canada jumped more than 25 percent in November from a year ago.

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  4. Prime Minister Justin Trudeau speaks at a press conference in Ottawa on October 26, 2021.

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Purchases at general merchandise stores rose 2.8% in October, and sales at sporting, hobby, book and music stores jumped 17.5% as prices rebound . E-commerce sales fell 0.9% in October, reflecting changing demand for services as vaccination rates increased.

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If provincial governments enact new lockdowns, the retail sector could suffer, but it has been shown through past waves that it can withstand the increase in the number of cases, especially in online sales, Porter said. The biggest worry is that the restrictions will hurt gross domestic product as a whole, as services and travel would likely stop.

Porter expects an immediate downside risk to GDP in the new year. Yet despite high inflation, third-quarter GDP stood at 5.4 percent annualized. The flash estimate for November’s retail sales figures was up, as was the estimate for wholesale sales, which climbed to 2.7%.

“At least we know the economy gained some momentum before Storm Omicron,” Porter said.

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• Email: bbharti@postmedia.com | Twitter:

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