Ottawa/CMEDIA: With Canadian retail sales reportedly in Nov being flat compared with Oct, the start of Ottawa’s GST/HST holiday pointed to a rebound in Dec. as an early estimate by Statistics Canada.
Most sectors were down, led by building materials (-2.1%) and food and beverage (-1.6%).
On the positive side, autos rose 2.0%, leaving sales ex-autos down 0.7%. Higher spending at gas stations (+0.7%) meant sales ex-autos and gas fell 1.0%.Seven provinces posted declines, led by New Brunswick (-2.0%) and PEI (-1.8%), while a 1.5% gain in Newfoundland & Labrador was the outlier.
Overall retail sales totalled $67.6 billion in Nov, the agency said Thursday relatively unchanged from October.
Provided Statistics Canada’s preliminary estimate of a 1.6 percent gain in retail sales in Dec holds, it would be the largest gain in two years, BMO senior economist Shelly Kaushik said
“A disappointing November showing for retail sales…a mid-December start to the GST/HST holiday kept consumers on the sidelines in the latter part of the month,” Kaushik said.
“A solid December flash estimate, and an otherwise decent showing in the second half of the year, support that view.”
A temporary GST/HST break on certain items ahead of the busy holiday shopping season announced by Ottawa in late Nov. started on Dec.14 and will continue until Feb.15.
“Looking beyond the temporary tax relief, lower policy rates should continue to support spending in 2025, but an uncertain trade environment could add meaningful headwinds,” Kaushik said.
The retail sales figures announced ahead of the Bank of Canada’s next interest rate decision set for Jan. 29 when it will also release its monetary policy report.
CIBC senior economist Katherine Judge said the two-month change in spending implies lower interest rates are working to boost consumer spending, but ample lost ground remains to be made up.
“Further interest rate reductions are clearly needed, with inflation below target, and downside risks from the threat of tariffs on Canadian exports to the U.S.,” Judge wrote in a report.
Sales at motor vehicle and parts dealers rose two percent in Nov, Statistics Canada said, while 0.7 percent increase was seen by gasoline stations and fuel vendors.
With dropping of sales by 1.5 percent.at supermarkets and other grocery retailers, except convenience stores, There was a fall in retail sales for food and beverage by 1.6 percent for the month, while general merchandise retailers witnessed a decline of one percent for the month.
Core retail sales excluding gasoline stations, fuel vendors, motor vehicle and parts dealers fell one percent in November.
Overall Canadian retail sales dropped 0.4 percent in November.
