Retail trade

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Retailers posted widespread gains in August, led by a second consecutive advance in new car dealer sales. In total, retail sales advanced 1.0% to $33.4 billion in August. Except for three months of slight declines, retail sales have been growing strongly so far in 2006.

Despite lower sales at gasoline stations, sales in the automotive sector (+1.5%) continued to surge ahead, on the strength of sales at new car dealers. Retail sales in the building and outdoor home supplies sector increased by 1.4% in August. Sales in this sector have been generally on the rise with only one month of decline since November 2005. Furniture, home furnishings and electronic stores' sales advanced 1.3%, continuing four consecutive months of sales gains.

General merchandise stores (+1.0%), clothing and accessories stores (+1.0%), food and beverage stores (+0.6%), and pharmacies and personal care stores (+0.6%) also posted higher sales.

Only one sector, miscellaneous retailers (-0.6%), experienced a sales decline in August. The miscellaneous category includes retailers such as office supply, sporting goods, hobby, music and book stores.

Excluding sales by dealers of new, used and recreational vehicles and auto parts, retail sales rose by 0.4% from July. Once price changes were taken into account, total retail sales grew by 1.1%.

Retail sales continue to grow, with the automotive sector leading the way

Sales at new car dealers continued to grow (+4.1%) in August. According to the New Motor Vehicle Sales Survey, truck sales (which include minivans, sport-utility vehicles, light and heavy trucks, vans and buses) accounted for 80% of the increase in new motor vehicle sales in August, due to incentives targeted at larger vehicles. After a period of relative stability, in the wake of dealer incentives during the summer of 2005, new car dealer sales picked up in July, while August sales levels actually surpassed the July 2005 peak. However, based on preliminary data from the automotive industry, the number of new motor vehicles sold in September is estimated to have slipped about 4%, due to a fallback in truck sales. Sales of new motor vehicles account for approximately 64% of new car dealers' sales.

Gasoline station sales fell by 1.7% following a 3.2% increase in July. Over the long run, gasoline station sales have been on the rise since April 2003 with higher prices playing a large part in this increase.

Used and recreational motor vehicles and parts dealers saw their sales fall by 0.9% in August. Sales at these dealers have increased at a rapid clip since the fall of 2005, peaking in April 2006. Most of this increase was attributable to the increased demand for recreational motor vehicles.

Retail sales gains in the building and outdoor home supplies stores sector were mainly due to home centre and hardware store sales, which were up by 1.7% in August. These types of stores continue to see a remarkable run-up in sales, experiencing only one month of decline in the previous 12-month period.

Within the furniture, home furnishings and electronics stores sector, sales at furniture stores advanced by 2.0%, contributing to over half of the sales gains in this sector. August's sales growth was the strongest since January 2006 when gift cards were thought to have induced a 6.9% spike in sales at furniture stores. Sales also rose in the other components of this sector: computer and software stores (+1.5%), home furnishing stores (+1.0%) and home electronics and appliance stores (+0.8%).

Both the general merchandise stores and clothing and accessories stores sectors saw sales advance 1.0% in August. Despite increases in sales at clothing stores (+0.7%) and shoe, clothing accessories and jewellery stores (+2.0%) in August, sales in both types of stores have levelled off in the recent months after a period of strong gains.

Sales in the food and beverage stores sector have picked up slightly since February 2006 after a relatively flat 2005. Supermarkets, which hold about 70% of the market share within this sector, saw sales increase by 0.4% in August. After a large drop in sales in January 2006, supermarkets were still trying to catch up to the December 2005 peak. The smaller components of this sector also experienced sales increases in August: convenience and speciality food stores (+1.4%); and, beer, wine and liquor stores (+1.0%).

Pharmacies and personal care stores posted their 10th consecutive sales increase in August. According to the Quarterly Retail Commodity Survey, health and personal care products, which account for 86% of sales in the sector, showed the second strongest sales growth among the major commodity groupings in the second quarter of 2006 over the same period in 2005. Only automotive fuels, oils and additives had a larger growth rate, with higher gasoline prices playing a major role.

Sales increase in most provinces

Overall, eight provinces and one territory saw sales increase in August. Leading the pack were the Northwest Territories (+5.0%) and Alberta (+1.8%). For Alberta, this marked its 11th consecutive sales increase and the highest year-over-year increase (+18.1%) for any province since the series began. Retail sales in Alberta have been rising sharply since 2000, as the province benefits from a boom in oil and gas production.

Retailers in Ontario posted their fifth monthly increase in 2006 in August (+1.1%). Sales in British Columbia advanced by 1.0% in August and have been generally rising after a period of flatness in 2002. Retail sales in Quebec rose 0.8%, mainly due to the automotive sector. According to the New Motor Vehicle Sales Survey, Quebec was responsible for over half of the national increase in motor vehicles sold in August.

Saskatchewan (-0.6%) and New Brunswick (-0.1%) were the only two provinces that posted lower sales.

Related indicators for September

Employment edged up slightly in September (+16,000), following three months of little change. The unemployment rate fell 0.1 percentage points to 6.4% in September, while the share of the population which was employed remained near record highs.

Housing starts were down 2.4% in August to a seasonally adjusted annual rate of 211,300 units, according to the Canada Mortgage and Housing Corporation. The decline in housing starts is attributable to a decline in multiple starts, which reached their lowest level since July 2004. For a second consecutive month, single-detached starts edged higher.

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

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

The August 2006 issue of Retail Trade (63-005-XIE, free) will soon be available.

Data on retail trade for September will be released on November 21.

For more information or to order data, contact Client Services (toll-free 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 Lucy Chung (613-951-1903), Distributive Trades Division.

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