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The Daily

Tuesday, October 23, 2007
August 2007

After two consecutive decreases in June and July, total retail sales increased 0.7% in August to an estimated $34.5 billion. Although sales in all eight retail trade sectors were up, sales by new car dealers (+3.0%) led the way.

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Despite a significant decline in gasoline station sales (-3.7%), which was mainly due to a drop of 4.9% in gasoline prices, according to the Consumer Price Index (CPI), sales in the automotive sector increased 0.3%.

Excluding sales from dealers of new, used and recreational vehicles and auto parts, retail sales increased by 0.3%.

Among the sectors, five had sales increases above 1.0%: pharmacies and personal care stores (+1.8%), furniture, home furnishings and electronics stores (+1.5%), clothing and accessories stores (+1.4%), together with miscellaneous retailers (+1.4%), and general merchandise stores (+1.3%).

In constant dollars, total retail sales grew 1.4% in August, indicating that there was a price effect. In addition to the decline in gasoline prices, the CPI showed a reduction of 1.8% in the cost of vehicle purchases and leases. Manufacturers' discounts on 2007 models accounted for this downward movement in new vehicle prices.

Sales of new cars recover in August

The increase of 3.0% in sales by new car dealers largely offset the 3.1% decline observed in July. The New Motor Vehicle Sales Survey revealed a 2.8% increase in sales, mainly due to the recovery of truck sales (which include minivans, sport-utility vehicles, light and heavy trucks, vans and buses).

Used and recreational vehicle and auto parts dealers experienced a decrease of 0.6% in their sales after a relatively flat month in July (+0.1%).

Sales in gasoline stations fell (-3.7%) for the third consecutive month. Nevertheless, since the drop in sales observed in September 2006, the trend has generally been upward.

Generalized increase in sales cancels out most of the decline in July

The pharmacies and personal care stores sector's advance of 1.8% in August was the second largest increase since the beginning of the year. Moreover, this sector posted only two months of declines since the middle of 2005.

The August rise of 1.5% in the furniture, home furnishings and electronics stores sector was the second consecutive monthly increase of over 1.0%. Rising sales in this sector were mainly due to the increase of 3.7% in sales by home electronics and appliance stores, representing the sharpest advance observed since February 2005. Sales in this trade group have not declined since the spring of 2006.

Both the clothing and accessories stores and the miscellaneous retailers sectors recorded an increase of 1.4% in sales in August, offsetting the decline in their July sales. The increase in sales in the clothing and accessories stores sector was mainly due to a rise of 1.7% in clothing stores sales, which more than offset the decline observed in July (-0.6%).

Sales in the general merchandise stores sector rebounded (+1.3%), almost entirely offsetting the decreases observed in this sector for the previous two months.

The building and outdoor home supplies stores sector saw an increase of 0.7% in its sales in August, offsetting most of the 1.0% decline in July sales. The increase in this sector's sales was attributable to home centres and hardware stores (+1.2 %), which experienced a rebound in sales that had decreased in the previous two months. According to the Canada Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts advanced 5.1% in August. Sales by specialized building material and garden stores decreased (-1.6%) for the second month in a row.

Sales in the food and beverage stores sector increased 0.3% in August. The major player in this sector, supermarkets, saw an increase in sales of a similar magnitude (+0.2%) after a decline of 1.0% in July. Beer, wine and liquor stores partially recovered (+0.7%) after a decline of 2.0% in July, whereas sales by convenience and specialty food stores remained practically flat (+0.1%).

New cars revive sales in Ontario and stimulate sales in Quebec and Prince Edward Island in August

In eight of the provinces and territories, retail sales were up in August. Prince Edward Island (+2.5%) and Ontario (+2.0%) recorded the two strongest sales growth rates, mainly because of increased sales by new car dealers. In the case of Prince Edward Island, this was the fourth consecutive monthly increase. Furthermore, according to the New Motor Vehicle Sales Survey, sales in Prince Edward Island advanced 13.2%.

The increases in Ontario (+2.0%) and Quebec (+0.6%) accounted for almost the entire advance in retail sales, with the automotive sector mainly responsible for this increase. The increase in August in Ontario almost totally offset the decline in July, which followed the strongest quarterly growth since the first quarter of 2002. In Quebec, growth in retail sales cancelled out most of the decline in July, which followed the strongest quarterly growth since the second quarter of 2001.

Of the provinces recording rising sales, Saskatchewan (+0.7%) experienced its sixth consecutive advance since the beginning of the year. The rise in Newfoundland and Labrador (+0.4%) was the sixth in the previous seven months.

Alberta (-0.5%) experienced a decline in retail sales for the second consecutive month, whereas sales in British Columbia, after stagnating in July, remained relatively flat (-0.1%).

Related indicators for September

In September, the unemployment rate edged down 0.1% to 5.9%. The unemployment rate was less than 6.0% for the first time since November 1974. This decline in the unemployment rate coincided with an estimated increase in employment of 51,000 jobs, and most of these were full-time jobs.

Provisional data on automotive industry sales indicate that the number of new motor vehicles sold dropped 2% in September.

According to the Canada Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts increased for the second consecutive month in September by 19.6%, from 232,700 units in August to 278,200 units in September.

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

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

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

Data on retail trade for September will be released on November 21.

For more information or to order data, contact Client Services (toll-free 1-877-421-3067; 613-951-3549; 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.

Tables. Table(s).