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The Daily. Wednesday, March 21, 2001

Retail trade

Total spending in retail stores advanced for a third consecutive month in January to $23.8 billion, up 0.6% from December. The retail sales strength in December and January followed a period of flat sales that had begun in July 2000. Retailers saw strong gains in May, June and July following volatile sales in the first four months of 2000.

In constant dollars, retail sales rose 1.1% in January. Lower prices were reported for motor vehicles, gasoline and clothing.

Several factors may explain the continuing growth in retail sales in January: total employment remained strong; tax cuts in January may have left more money for consumers to spend in retail stores; the Bank Rate was reduced from 6.0% to 5.75% in January, the first interest rate cut by the Bank of Canada since May 1999; and housing starts reached their highest level since June 1994, rising 17.8% in January.

All sectors except food stores posted higher sales in January. Monthly increases were led by furniture and clothing stores.

Furniture stores started 2001 with a bang

After seeing a mild slowdown in the last three months of 2000, retailers in the furniture sector posted a 6.1% sales increase in January. This was their largest monthly sales gain in the last 10 years. Sales advanced by 1.3% in the last quarter of 2000, the weakest quarterly increase since the third quarter of 1997. Sales in the furniture sector have been advancing since the spring of 1996. Furniture and household appliances account for approximately 40% of all sales in the furniture sector, and home electronics and computers for another 30%.

Consumers returned to clothing stores

Consumers spent 4.0% more in the clothing sector in January, after staying away for the previous three months. Men's (+9.2%), women's (+5.5%) and other clothing stores (+3.3%) reported significant sales gains. Stores in the "other" category sell a variety of women's, men's and children's clothing. January's sales increase was the largest since February 1991 for men's clothing stores, and since May 1996 for women's clothing stores. Sales in the clothing sector weakened during the last quarter of 2000, after generally increasing for the rest of that year. About 60% of all clothing is purchased from stores in the clothing sector; most of the remainder is purchased from general merchandise and sporting goods stores.

Stores in the general merchandise sector reported a 1.6% increase in sales in January, following a 2.5% gain in December. These rises were led by department stores, which posted sales gains of 3.5% in January and 4.1% in December. The opening of several new stores in late November may have helped stimulate overall sales by department stores. Department store sales slowed down in the second half of 2000, after rising in the first part of that year.

The 0.6% sales increase observed in the automotive sector in January was led by motor and recreational vehicle dealers (+2.2%). The motor and recreational vehicle dealers category includes not only new car dealers, but also dealers of used cars, motor homes and snowmobiles. In addition, new car dealers rely on sales of new cars for approximately 60% of their revenues; the rest comes from sales of used cars, parts and labour services.

Also in the automotive sector, automotive parts and services stores posted a 3.5% sales decline in January, and lower prices of gasoline at the pump pushed gasoline service stations sales down 1.5%. Sales in the automotive sector weakened in the last quarter of 2000, after advancing strongly since the fall of 1998.

Consumers reduced their spending in food stores in January (-2.9%), after a 2.0% increase in December. About one-quarter of all food store sales come from non-food items. Food store sales advanced rapidly in 2000, posting their strongest annual gain in the last three years.

Strong retail sales in most provinces

All provinces posted retail sales increases of at least 0.9% in January except British Columbia (-1.0%), Quebec (-0.8%) and Nova Scotia (-0.8%). Those three provinces had posted healthy gains in December. Most provinces with rising retail sales in January showed lower sales or weak gains in December.

Related indicators for February 2001

Total employment was down 0.2% in February, the first monthly decline since July 2000. Housing starts fell 8.6% in February, losing about half the gain posted in January. And, according to preliminary figures from the automotive industry, a sizeable drop in passenger cars sales pushed down the total number of new motor vehicles sold in February.

Available on CANSIM: matrices 2399 and 2400 (main matrices), 2299, 2397, 2398, 2401-2416 and 2418-2420.

The January 2001 issue of Retail trade (63-005-XIB, $16/$155; 63-005-XPB, $21/$206) will be available soon. See How to order products.

Retail sales estimates for February 2001 will be released on April 24.

To order data, or for general information, contact the Client Services Unit (1-877-421-3067; 613-951-3549; retailinfo@statcan.gc.ca). For analytical information, or to enquire about the concepts, methods or data quality of this release, contact Paul Gratton (613-951-3541; gratpau@statcan.gc.ca), Distributive Trades Division.

Retail sales

Retail sales