Retail trade

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Weak sales in Ontario nearly offset sales gains in eight provinces, leaving retail sales in Canada virtually unchanged in October. Sales edged up slightly (+0.1%) to an estimated $34.5 billion. Since 2004, retail sales in Canada have grown rapidly but have stagnated for the past several months.

The decline in sales in Ontario (-0.5%), which represents approximately 35% of Canadian retail sales, cooled off October's retail trade performance. This decline was primarily due to general merchandise stores and used and recreational motor vehicles and parts dealers. This is the fourth decline in sales in this province in the last five months. Excluding Ontario's sales, retail sales in Canada would have risen 0.5%.

Once price changes are taken into account, retail sales in constant dollars rose 0.5% in October, indicating that there was an increase in the volume of sales. In addition to a 3.3% drop in the price of gasoline, there was also a 1.4% decrease in the cost of purchasing and leasing vehicles.

Sales in the automotive sector rose 0.7% in October, due primarily to the 1.0% increase in sales by new car dealers. In both cases, the increase partially offsets the decline observed in September 2007. Used and recreational motor vehicles and parts sales declined for a fifth consecutive month (-0.9%) while gasoline stations recorded a second consecutive increase in their sales (+0.9%).

Excluding new, used and recreational motor vehicles and parts dealers, retail sales remained virtually unchanged for a third consecutive month.

The second largest increase in sales was observed in the miscellaneous retailers' group (+1.2%), which includes sporting goods stores, bookstores, office supply stores and art dealers, among others.

The other sectors experiencing growth in their sales in October were building and outdoor home supplies (+0.3%), furniture, home furnishings and electronics stores (+0.1%) and pharmacies and personal care stores (+0.1%).

The two main sectors offsetting total retail sales in October were general merchandise stores (-1.2%) and clothing and accessories stores (-0.8%). Food and beverage stores (-0.1%) experienced a slight decline in sales.

Truck sales stimulate the automotive sector

The increases in sales by new car dealers (+1.0%) is primarily attributable to truck sales (+2.4%), according to the New Motor Vehicle Sales Survey. In this survey, trucks include mini-vans, sport utility vehicles, light and heavy trucks, vans and buses. This rise in sales follows declines in three out of the last four months.

Used and recreational motor vehicles and parts dealers posted a fifth straight decline in sales, with a 0.9% decrease in October. These declines follow a period of strong growth that began in early 2006.

Gasoline stations marked a 0.9% increase in their sales despite a 3.3% drop in the price of gasoline, according to the Consumer Price Index (CPI). Since the decrease in sales observed in September 2006, sales have generally been on the rise. This drop in price is primarily due to the strength of the Canadian dollar, which offsets the increases in the price of a barrel of crude oil, purchases of which are negotiated in US dollars.

Excluding the automotive sector, sales soften

Among miscellaneous retailers, which saw an overall 1.2% increase, miscellaneous store retailers (including office supply stores and art dealers, among others) experienced a 2.8% increase in their sales, while sporting goods, hobby, music and book stores experienced a 0.4% decline. Miscellaneous retailers' sales have been on an upward trend since late 2005.

Sales at building materials and outdoor home supplies stores rose for a third straight month (+0.3%), primarily due to specialized building materials and garden stores (+3.8%). This is a result of the strong housing starts in Canada in September, which rose at a seasonally adjusted annual rate of 19.6% from August, according to the Canada Mortgage and Housing Corporation. Home centres and hardware stores saw their sales decrease (-0.6%) after having been stable in September.

October sales in furniture stores, home furnishings and electronics (+0.1%) paused following a sharp drop in September (-1.9%), which was the largest decline since May 2005. The main factors responsible for this slight gain were computer and software stores (+3.2%) and home electronics and appliances stores (+0.2%).

The two main sectors offsetting total retail sales in October are general merchandise stores (-1.2%) and clothing and accessories stores (-0.8%). The decrease observed in clothing and accessories stores in October is primarily due to clothing stores (-1.1%). This could be related to the 2.3% drop in the prices of women's clothing, as measured by the CPI. According to the Quarterly Retail Commodity Survey, clothing and accessories stores account for two-thirds of all the clothing sold in retail stores, while approximately one-quarter are sold in general merchandise stores.

In the food and beverage store sector (-0.1%), the decline in sales for beer, wine and liquor stores (-0.7%) and for convenience and specialty food stores (-0.9%) was almost entirely offset by a slight increase in supermarket sales (+0.1%). The latter trade group saw its sales climb for a third straight month without completely cancelling the decrease in sales in July (-1.0%).

The slight increase in October's sales for pharmacies and personal care stores (+0.1%) slowed but did not disrupt the general upward trend.

Sales jump in the Atlantic provinces in October

Eight provinces experienced an increase in retail sales in October. After two months of stagnating sales, the largest increase was recorded in the Atlantic provinces (+1.4%). Prince Edward Island (+2.6%) experienced the highest increase among all the provinces. According to the New Motor Vehicles Sales Survey, the number of new vehicles sold in this province rose 12.9% in October. The other Atlantic provinces—Newfoundland and Labrador (+1.5%), New Brunswick (+1.5%) and Nova Scotia (+1.1%)—all experienced increases that were clearly superior to the national performance.

Among the other provinces recording increases, Alberta (+0.5%) experienced its first growth after three straight months of declining retail sales. Sales in Quebec (+0.4%) rose after a decrease in September. Sales in British Columbia (+0.2%) continued to be relatively stable.

Saskatchewan (-0.2 %) experienced its first dip in sales in six straight months.

Related indicators for November

Employment was up in November by approximately 43,000 jobs, which brought the employment rate to an unprecedented high (63.8%). While more people joined the labour force in November, the unemployment rate rose 0.1 of a percentage point to 5.9%.

Preliminary data on automotive industry sales indicate that the number of new cars sold in November declined 1.0% due to truck sales.

According to the Canadian Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts in Canada remained virtually unchanged, going from 227,600 in October to 227,900 in November, an increase of only 0.1%.

Available on CANSIM: tables 080-0014 to 080-0017.

Definitions, data sources and methods: survey numbers, including related surveys, 2406 and 2408.

The October 2007 Retail Trade (63-005-XWE, free) will soon be available.

Data on retail trade for November 2007 will be released on January 22, 2008.

For more information or to order data, contact Client Services (toll-free 1-877-421-3067; 613-951-3549; retailinfo@statcan.gc.ca). For analytical information, or to enquire about the concepts, methods or data quality of this release, contact Claude Bilodeau (613-951-1816), Distributive Trades Division.

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