By Robb M. Stewart
Canadian retail spending has shown no significant change as we enter the holiday season, indicating that consumers may be more hesitant to spend in a challenging economic environment with high interest rates.
According to an advance estimate of receipts released by Statistics Canada, retail sales remained relatively unchanged last month. In October, sales experienced a 0.7% increase to 66.95 billion Canadian dollars ($50.08 billion), a figure that was slightly below economists’ expectations of a 0.8% advance. This growth follows a revised 0.5% increase in September.
Compared to the previous year, retail sales in October were 2.2% higher.
The rise in October’s sales was primarily driven by automotive dealers, while gasoline stations and fuel vendors experienced a significant drop in receipts due to lower prices offsetting higher volumes. Overall, sales increased in seven out of nine subsectors tracked by Statistics Canada.
When excluding gasoline stations and motor-vehicle and parts dealers, core retail sales saw a 1.2% increase from September, buoyed by sales at general merchandise retailers.
In terms of volume, price-adjusted sales experienced a robust 1.4% rise for the month, which was significantly higher than the previous month’s 0.2% increase.
However, the upward trend in overall retail trade appears to have leveled off in November. This estimate, based on responses from nearly 55% of surveyed companies, will be subject to revision.
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It is clear that the Canadian economy continues to face challenges as it navigates through a period of contraction. While some sectors experience modest growth, others face declines. The impact of higher interest rates and a restrained spending environment will likely shape the country’s economic trajectory in the coming months.