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The Daily

Tuesday, January 22, 2008
November 2007

Strong gasoline station sales and a recovery in general merchandise store sales helped push up retail sales by 0.7% in November to an estimated $34.8 billion. This marked the third increase in retail sales in four months. After showing signs of moderating in mid-2007, retail sales returned to the rapid growth rate that started in 2004.

When price changes are taken into account, retail sales in constant dollars rose 0.2% in November, indicating that there was a price effect, primarily reflecting a 4.0% hike in gasoline prices at the pump, based on the Consumer Price Index (CPI).

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Sales rose in five of the eight retail trade industry sectors in November. Strong gains were recorded in sectors traditionally associated with Christmas shopping, such as general merchandise stores (+2.3%), furniture, home furnishings and electronics stores (+1.4%), clothing and accessories stores (+1.2%) and food and beverage stores (+0.9%).

Sales in the automotive sector rose 0.6% in November, as a result of a 7.7% increase in gasoline station sales. Higher gasoline prices boosted the sales value reported by gasoline stations in November. The sharp jump in gasoline station sales represents almost two-thirds of the 1.7% increase in retail sales, excluding sales by new car dealers and used and recreational motor vehicles and parts dealers.

Building and outdoor home supplies stores posted a significant 2.4% drop in November. Among other sectors, sales at pharmacies and personal care store sales edged down 0.2%, while sales by miscellaneous retailers remained stable.

Gasoline prices drove growth in the automotive sector

November saw the largest jump in gasoline station sales (+7.7%) since May 2004 (+10.4%). Gasoline station sales have generally been on the rise since the decline observed in September 2006. Higher gasoline prices and the corresponding climb in the price of a barrel of crude oil (traded in US dollars) coincided with the halt in the appreciation of the Canadian dollar.

November's decline in sales by new car dealers (-3.5%) was primarily attributable to truck sales (-4.0%), according to the New Motor Vehicle Sales Survey. (Trucks include mini-vans, sport utility vehicles, light and heavy trucks, vans and buses.) This was the fourth decline in sales by new car dealers in six months, reducing sales to February 2007 levels.

Used and recreational vehicles and parts dealers posted a sixth straight decline in sales with the 0.4% drop in November. These declines follow a period of strong growth that began in early 2006.

Excluding the automotive sector, sales strengthened again in November, thanks to general merchandise stores

Apart from gasoline stations, the biggest increase in sales was observed in general merchandise stores (+2.3%), which showed renewed vigour after poor results in October (-1.6%). In November, general merchandise stores experienced their second strongest monthly sales gain since the beginning of 2007.

This recovery in general merchandise store sales coincided with the recovery of sales by clothing and accessories stores (+1.2%) in November. The 1.1% decline in the price of clothing (according to the CPI) seems to have boosted November's retail sales. Sales of clothing and accessories represent over 15% of sales in general merchandise stores, according to the Quarterly Retail Commodity Survey. The sales increase by clothing and accessories stores in November followed a two-month decline.

Sales in the furniture, home furnishings and electronics stores sector (+1.4%) gained momentum in November after a lull in October, posting its second largest sales increase since the beginning of 2007. The main factors responsible for this growth were home electronics and appliance stores (+3.4%) and furniture stores (+2.1%).

The food and beverage store sector saw all trade groups register higher sales in November, with the biggest contribution coming from beer, wine and liquor stores (+2.4%) sales, which posted their second largest sales increase since the beginning of 2007. Supermarkets (+0.4%) saw their sales continue to progress slowly for a fourth consecutive month, while convenience and specialty food stores (+1.5%) saw their sales increase for the fourth time in five months.

The main sector offsetting total retail sales in November was the building and outdoor home supplies stores sector (-2.4%). This was the second largest decrease in this sector since the beginning of 2007 and was mainly attributable to the third consecutive decline (-2.6%) in sales at home centres and hardware stores. After experiencing almost uninterrupted growth for a few years, sales by home centres and hardware stores have been on a downward trend since mid-2007. As for specialized building materials and garden stores, they have seen their sales slip 1.6%, after two months of strong gains. November's sales in this sector generally represent a smaller portion of annual sales than in most retail trade sectors.

Rise in retail sales limited to Central and Western Canada

Retail sales increased in six provinces in November. The largest increase in terms of dollars was recorded in Ontario (+1.0%) and Quebec (+0.6%). In Ontario, this recovery in sales entirely offsets weak October sales (-0.3%), while for Quebec, it was the second consecutive monthly increase. The main factor contributing to the growth observed in these two provinces was the rise in gasoline station sales.

Retail sales increased for the seventh time in eight months in Saskatchewan, climbing 1.9% in November. In Alberta, November's sales increase (+0.8%) continued the rebound of October after falling for three consecutive months. In British Columbia, retail sales continued to be relatively flat in November (+0.2%).

In the Atlantic provinces, Newfoundland and Labrador (-1.0%), Prince Edward Island (-1.5%) and Nova Scotia (-0.9%) posted lower retail sales in November after an excellent month in October. The downturn in sales by new car dealers in these provinces was a major factor in these declines.

Related indicators for December

After expanding for seven consecutive months, employment edged down in December (-19,000). Over 2007, however, employment was up an estimated 2.2% (+370,000), similar to the growth rate of 2006 (+2.1%) and the 15th consecutive year of employment growth. The unemployment rate held steady at 5.9% in December.

Preliminary data on automotive industry sales indicate that the number of new cars sold in December increased by 3.0% as a result of truck sales.

According to the Canada Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts in Canada decreased 19.6% from 233,300 in November to 187,500 in December.

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

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

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

Data on retail trade for December will be released on February 22.

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).