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Canadian retail sales rose for third straight month in September: StatsCan

Employees greet the first shoppers at the opening of the first international Microsoft Store in Toronto on November 16, 2012. THE CANADIAN PRESS/Frank Gunn

OTTAWA - Statistics Canada reported retail sales edged up in September, helped by improved sales of new cars, but fell short of expectations amid increasing signs of economic uncertainty.

Sales were up 0.1 per cent to $39.1 billion in September, the third straight monthly increase, but well short of the 0.5 per cent consensus expectations of economists.

"Indeed, sales growth has now cooled to a humble 1.8 per cent year-over-year as Canadian retailers face some stiff challenges," BMO Capital Markets economist Robert Kavcic wrote in a note to clients.

"In addition to cooling domestic consumer credit growth, this weekend's likely stampede of shoppers south of the border will highlight the other challenges — a loonie near parity, more generous duty-free limits and more aggressive U.S. sale prices."

The weaker than expected retail sales results came as Statistics Canada also reported the number of people receiving regular employment insurance benefits in September was down by 5,700 at 525,900.

However economist Erin Weir of the Progressive Economics Forum noted that the decrease wasn't good news.

"Unfortunately, the Labour Force Survey indicates that the number of unemployed workers is growing. The drop in EI recipients means that more jobless workers are falling through the cracks," Weir said.

Earlier this week, Statistics Canada reported that wholesale sales fell 1.4 per cent to $48.8 billion in September, the third decline in four months.

Retail sales were boosted by new car sales as Canadians continued what has been a strong year for car sales. Industry estimates put the automakers on pace for what could be a record year for sales.

A report Thursday by the Conference Board of Canada, suggested the country's auto industry is expected to post its third consecutive annual year of profitability this year and its best result since 2002.

The board said in the first eight months of 2012, auto production rose almost 20 per cent compared to the same period last year, while sales during the same period were up 7.1 per cent and on track to reach 1.72 million vehicles — the highest levels since 2002.

In September, the motor vehicle and parts dealers subsector was up 0.6 per cent as new car sales gained 0.9 per cent.

Sales rose also 2.5 per cent at miscellaneous retailers, a category that includes used merchandise stores, office supply and stationery stores, and pet supply stores.

However general merchandise store sales decreased 0.7 per cent, with department store sales off 0.9 per cent.

Food and beverage store sales were up 0.1 per cent, as sales at supermarkets and grocery stores were up 0.2 per cent and specialty food stores gained 1.4 per cent. Beer, wine and liquor store sales fell one per cent.

Sales at electronics and appliance stores rose 0.8 per cent, while gasoline stations saw sales drop 0.6 per cent after two consecutive monthly increases.

CIBC economist Emanuella Enenajor said the September retail sales will provide no life to the third-quarter gross domestic product.

"September GDP growth could track no better than flat," Enenajor wrote in a report.

"Third-quarter growth now looks likely to track around 0.5 per cent annualized due to a dented trade sector, and the fourth-quarter now looks likely to come in around two per cent rather than the 2.5 per cent the Bank of Canada was looking for, owing to a weak handoff from September."

Sales rose in five provinces in September led by Alberta. Quebec's sales were off 0.7 per cent in Quebec and Ontario's were flat.


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