Canadian Retail Trade Update, March 2023

Retail sales decreased 1.4% to $65.3 billion in March. Sales decreased in 5 of the 9 subsectors, representing 55.5% of retail trade, led by decreases at motor vehicle and parts dealers (-4.4%) and gasoline stations and fuel vendors (-3.9%). Core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—increased 0.3% in March.

In volume terms, retail sales decreased 1.0% in March. Retail sales were up 0.7% in the first quarter of 2023. In volume terms, retail sales were up 1.2%. 

Core retail sales increase on gains at building material and garden equipment and supplies dealers

Core retail sales increased 0.3% in March, posting its fourth consecutive increase. The gain was led by higher sales at building material and garden equipment and supplies dealers (+1.6%). Higher sales were also recorded at sporting goods, hobby, musical instrument, book, and miscellaneous retailers (+1.6%).

The largest decrease to core retail sales came from clothing, clothing accessories, shoes, jewelry, luggage and leather goods retailers (-1.2%). Sales were down in two of the three store types, led by lower sales at clothing and clothing accessories retailers (-1.0%).

Sales down in nine provinces

Retail sales decreased in nine provinces in March. Ontario (-1.7%) had the largest provincial decrease, led by lower sales at motor vehicle and parts dealers. In the census metropolitan area (CMA) of Toronto, retail sales were down 1.2%. In New Brunswick, retail sales decreased 10.7%, led by lower sales at motor vehicle and parts dealers.

British Columbia (+0.9%) was the only province to record an increase in retail sales. The increase was driven by higher sales at motor vehicle and parts dealers. In the CMA of Vancouver, retail sales were up 2.0%.

Retail e-commerce sales in Canada

On a seasonally adjusted basis, retail e-commerce sales in March were up 2.2% to $3.8 billion, accounting for 5.9% of total retail trade, compared with 5.7% in February.

Advance retail indicator

Statistics Canada is providing an advance estimate of retail sales, which suggests that sales increased 0.2% in April. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 38.2% of companies surveyed. The average final response rate for the survey over the previous 12 months was 89.4%.

Source: Statistics Canada 


U.S. Retail Sales Rise in April for the First Time in 3 Months

  • U.S. retail sales rose 0.4% month-on-month (m/m) in April, roughly half the consensus forecast calling for an increase of 0.8% m/m. March’s reading was revised up, changing last month’s decline to -0.7% (previously -1.0%). Most of these revisions were due to the release of the 2021 Annual Retail Trade Survey on April 24th which is used as a benchmark for the monthly data.
  • Sales in the auto sector increased for the first time in three months, largely driven by strength in automotive parts & tire stores (+3.8). Excluding autos, retail sales were unchanged at 0.4% m/m.
  • Sales in other more volatile categories were mixed in April. The building materials and equipment category rose 0.5% m/m while sales at gasoline stations declined 0.8% m/m.
  • Retail sales in the “control group”, which excludes the above categories and is used to estimate personal consumption expenditures (PCE), rose 0.7% m/m, up from a downwardly revised -0.4% m/m reading in March.
  • The largest gains by spending category were seen by miscellaneous retailers (+2.4% m/m), non-store retailers (+1.2% m/m), and general merchandise stores (+0.9% m/m). Spending at health & personal care stores also saw a 0.9% m/m increase after previously slowing in March. 
  • Categories which continued to see losses in April include sporting goods, hobby, book, & music stores (-3.3% m/m), clothing & accessory stores (-0.3% m/m), and food & beverage stores (-0.2% m/m).

Key Implications

  • The arrival of warmer weather ushered in a moderate rebound in retail spending in April, marking the first increase in three months. However, there were notable downward revisions to 2023Q1, with annualized growth for the first three months of the year now sitting at 4.8% (previously 7%). April’s rebound was underpinned by strength in auto spending, building materials & equipment, and general good products. Looking ahead we expect consumer spending to slow over the course of this year as past rate hikes continue to filter through the economy.
  • The second quarter results of the Federal Reserve’s Senior Loan Officer Opinion Survey showed that consumer credit continued to tighten but remained relatively accessible despite recent regional bank stress. While the survey does not track the extent to which commercial banks are tightening credit standards, it did show that consumer demand for financing rose in April relative to January. As many consumers have exhausted their pandemic savings, there is an increasing reliance on financing to deal with elevated prices.    

Source: Economics