Canadian retail sales continued to beat estimates in November before tighter COVID-19 restrictions took hold. Receipts increased 1.3% in November from the previous month, Statistics Canada reported on January 22 in Ottawa, led by food, beverage and online sales. Economists were expecting sales to be unchanged.

Retail sales rebounded quickly after collapsing in April, and have held up better than expected since then, given the massive government income support measures. It’s unclear how long the strength will last, given the recent surge in virus cases and renewed restrictions in many provinces. A preliminary estimate for December shows sales dropped 2.6%.

Retail expert Farla Efros said it’s not surprising the sales would taper off in December given the heavy discounting offered on Black Friday in November, as well as Amazon’s decision to move its Prime Day to mid-October. “Most people took the opportunity to do their shopping early and get those deals,” said Efros, president of HRC Retail Advisory.

But even with the decline in December, retail sales would still be 2.9% above February levels. Monthly average retail sales in 2020 were only 1.3% below 2019 levels.

Receipts rose in 7 of 11 sub sectors. Excluding vehicles, retail sales in November climbed 2.1%, versus a forecast for a 0.3% increase. Vehicle sales dropped 0.9%. In volume terms, total sales were up 1.2%.

The latest Statistics Canada figures show a strong growth in online shopping in November. Retail e-commerce sales for November were up 75.9% from the same month a year earlier, the agency said. “The rise in sales coincided with retailers urging online shoppers to buy early to avoid shipping delays, as well as promotional events such as Black Friday,” Statistics Canada said in its release.

U.S. Retail Sales Fell Again in December

U.S. retail sales fell for a third straight month in December as renewed measures to slow the spread of COVID-19 triggered job losses, further evidence that the wounded economy lost considerable speed at the end of 2020.

December’s retail sales dropped 0.7%. Data for November was revised down to show sales tumbling 1.4% instead of 1.1% as previously reported. Sales rose 2.9% on a year-on-year basis.

The monthly decline in sales was led by a 4.5% plunge at restaurants and bars after many authorities banned indoor dining over the holiday season. Online sales tumbled 5.8%. Receipts at electronics and appliance stores dropped 4.9%.

Consumers also cut back spending at sporting goods, hobby, musical instrument and book stores as well as beverage stores. That offset a 1.9% rebound in sales at auto dealerships and a 2.4% increase in receipts at clothing stores. There were also gains in sales at building material stores as well as health and personal care outlets.

The steep declines in core retail sales prompted economists to cut their consumer spending and GDP growth estimates for the fourth quarter. The government reported last week that the economy shed jobs in December for the first time in eight months. Further job losses are likely in January as new claims for unemployment benefits surged in the first week of the month.

Rampant coronavirus infections and delays by the government to approve more money to help businesses and the unemployed are behind the loss of economic momentum. Growth estimates for the fourth quarter are around a 5% annualized rate, largely reflecting an inventory build, which is boosting manufacturing.

The economy grew at a 33.4% rate in the third quarter after contracting at a 31.4% pace in the April-June quarter, the deepest since the government started keeping records in 1947. Though economic growth is slowing, inflation is stirring, with a fifth report from the Labor Department showing the producer price index for final demand increased 0.3% in December after nudging up 0.1% in November.

Source: Financial Post
Source: Toronto Star
Source: Globe and Mail
Source: Globe and Mail