Canadian retail sales surpass $66 billion in January

Retail sales increased 1.4 per cent to $66.4 billion in January with sales up in seven of nine subsectors, representing 88.7 per cent of retail trade. The increase was led by higher sales at motor vehicle and parts dealers (+3.0 per cent) and gasoline stations and fuel vendors (+2.9 per cent), reported Statistics Canada on Friday.

Gustavo Fring

Core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—increased 0.5 per cent  in January. In volume terms, retail sales increased 1.5 per cent in January, said the federal agency.

“Sales were up 3.0 per cent at motor vehicle and parts dealers in January, a sixth consecutive monthly increase. The gain was led by higher sales at new car dealers (+3.0 per cent), which posted its second largest increase since May 2022. Also contributing to the gain in January 2023 were higher sales at other motor vehicle dealers (+8.9 per cent) and used car dealers (+0.7 per cent),” it said.

“Following the decline in December—the largest since July 2022—sales at gasoline stations and fuel vendors increased 2.9 per cent in January 2023. In volume terms, sales at gasoline stations and fuel vendors decreased 0.6 per cent. Gasoline prices rose 4.7 per cent on an unadjusted basis in January, largely related to refinery closures in the southwestern United States following winter storm Elliott.

“Core retail sales rose 0.5 per cent in January, with food and beverage retailers leading the increase. Sales were up in three of four store types, namely at beer, wine and liquor retailers (+2.3 per cent), convenience retailers and vending machine operators (+6.0 per cent) and specialty food retailers (+3.3 per cent). The Consumer Price Index noted prices for food purchased from stores were up 10.4 per cent on a year-over-year basis in January.”

StatsCan said sales increased in all provinces in January with the largest provincial increase was observed in Alberta (+2.9 per cent), led by higher sales at motor vehicle and parts dealers.

On a seasonally adjusted basis, retail e-commerce sales were down 0.1 per cent to $3.3 billion in January, accounting for 5.0 per cent of total retail trade compared with 5.1 per cent in December.

Ksenia Bushmeneva, Economist, TD Economics, said consumers started the new year on a stronger footing.

“Much of the gain is due to an acceleration in vehicle sales on the back of improved vehicle availability – a category that accounts for a quarter of all retail sales. Excluding sales at dealerships and gasoline stations – two categories which account for more than a third of retail sales – gains in core sales were positive in both December and January,” she said.

“A better-than-expected end of 2022 and the start of 2023 has led to upgrades in our consumer spending outlook for the first half of this year. Households got some reprieve from financial headwinds in recent months: household wealth edged higher in Q4, job growth re-accelerated and government checks and daycare subsidies gave a boost to income (report). On the other hand, debt servicing costs have been moving higher, and much of the pain from higher interest rates on household finances is yet to come. As such, we continue to expect consumer spending to slow significantly in the second half of this year as this headwind intensifies and the labour market slows (see our recent forecast).”