Retail sales unexpectedly fall 0.6% in Feb

Statistics Canada says retail sales fell 0.6% to $47.8 billion in February, due in large part to lower sales at motor vehicle and parts dealers and gasoline stations.

Economists had expected a decline of 0.1%, according to Thomson Reuters.

The move lower in February followed a whopping 2.3% increase in January.

Statistics Canada says sales were down in five of 11 subsectors, representing 67% of total retail sales. In volume terms, retail sales edged down 0.1%.

Excluding motor vehicle and parts dealers (down 1.8%) and gasoline stations (down 3.6%), retail sales were up 0.5%.

Analysis

“February’s sales decline was mostly due to lower prices,” says Krishen Rangasamy, senior economist at National Bank, in an industry note. After a blistering start to 2017, “a moderation in consumer spending was always in the cards.”

The big picture continues to focus on a resilient Canadian consumer, he says, as Canadians increase their savings rate, realize income gains from a decent labour market and benefit from housing wealth.

Read: Household spending continues to drive growth

“Another piece of good news is the recovery in Alberta and Saskatchewan,” says Rangasamy, noting that Alberta leads the country in year-over-year retail gains, at 6.3%. “That’s quite a turnaround after the struggle of the past two years due to the oil shock.”

Read: TransCanada deal won’t solve natural gas issues

In an economics note, Nick Exarhos, economist at CIBC World Markets, says the bank is upgrading Friday’s February GDP forecast to flat from -0.1%, based on both retail and wholesale results. The latter, released on Monday, were down 0.2% in February.

Also read: Economics data to watch this week

Dina Ignjatovic, economist at TD, says in a note that the retail report is unlikely to alter the Bank of Canada’s view on monetary policy.

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.