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B.C. retail sales outperform the rest of Canada in September

Canadian retail sales dipped 0.6%, to $56.6 billion, in September, which is less than the 1.9% decline that Statistics Canada had previously forecast.
Stronger Canadian retail sales conforms to a trend seen across North America.

Canadian retail sales were higher than expected in September, with B.C. retailers doing better than counterparts across the country. 

Canadian retail sales dipped 0.6%, to $56.6 billion, in September, compared with August. That is less than the 1.9% decline that Statistics Canada had previously forecast. Year-over-year, sales increased 4.8% in September.

B.C.'s September retail sales increased 1.1%, to $8.3 billion, compared with August, and were up 6.7% year-over-year.

Canadian retail sales are expected to rise 1% in October, Statistics Canada said.

The biggest drag on Canada's September's retail sales was the automotive sector, as the global semiconductor-chip shortage fueled motor vehicle and parts dealers' 1.6% decline in sales, while new vehicle dealers saw a 2.8% decline in sales, compared with August, the nation's number cruncher said November 19.

Sales decreased in seven of Statistics Canada's 11 subsectors, with those declining subsectors representing 63.5% of the nation's retail trade.

Core retail sales, which exclude gasoline stations and motor vehicle and parts dealers, decreased 0.3%.

The data also show that inflation played a role in keeping the retail sales decline from being larger. This is because the total volume of retail sales fell 1.1% in September.

Retail sales were up 2.7% in the third quarter, which is the largest increase since the third quarter of 2020. By volume, quarterly sales rose 1.5% in the quarter.

Statistics Canada noted that based on respondent feedback, 0.5% of retailers were closed at some point in September, compared with approximately 0.6% in August. This is the third straight month that less than 1% of retailers experienced closures.

Its projection that October sales will rise by 1% is likely to be revised as it is an unofficial estimate based on responses from 50.3% of companies surveyed.

Retail analyst and DIG360 owner David Gray said he was not surprised that retail sales were down in September, compared with August, because that conforms to Canadians' traditional spending pattern. 

He told BIV that he believes that retailers' challenge in securing supplies could hurt fall sales. There are bright spots, though, he added. 

"Clothing is on a rebound, especially for fall and winter wear," he said. 

News of Canadian retailers' better-than-expected September performance synchronizes with the trend seen across North America. 

The U.S. Commerce Department is faster than Statistics Canada at tabulating data, and was able to reveal that country's retail data for October on November 16. 

Retail sales south of the border jumped 1.7% in October, which was the largest gain since March. That came after those sales rose 0.8% in September.

The October retail sales increase in the U.S. was the country's third straight monthly increase, and it topped economists' expectations for a 1.4% increase.

October retail sales in the U.S. were up 16.3% year-over-year, and were up 21.4% compared to the same month in 2019.

Neil Saunders, managing director of GlobalData, told BIV in an email that the U.S. data show that inflation is starting to play more of a role than some had expected, and that households are able to absorb the shock of higher prices.

"Savings remain elevated, and there is a continued wiliness to spend down some of these reserves," he said. "There is a continued migration of spend from services into products, which is a major beneficiary to the retail sector."

Consumers are "determined" to spend what it takes to have a good time during the holiday season, so near-term retail sales are likely to be strong, he said.

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