Retail trade

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Retail sales decreased for the second consecutive month in July as a result of widespread declines.

Retail sales fell 0.8% in July to an estimated 34.3 billion, mainly due to a decline in the automotive sector and a slight decrease in five other retail sectors. Excluding sales by new, used and recreational motor vehicle and parts dealers, retail sales decreased 0.3%.

The drop observed in July, in addition to June's decline (-1.1%), did not completely offset the gain in May (+2.8%), when sales rose sharply, with widespread gains in seven of the eight retail sectors.

Sales in the automotive sector fell 1.3% in July, following a sharp rise in May (+4.3%) and a drop in June (-2.9%). The July decline was due to a second consecutive monthly drop in sales by new car dealers (-2.8%), which fell to a level slightly below the one in March.

Significant decreases were observed in the food and beverage stores sector (-1.2%), and in the building and outdoor home supplies stores sector (-1.1%). The decline in the food and beverage stores sector followed five consecutive months of sales gains. Sales in the building and outdoor home supplies stores sector declined after sharply increasing in May (+5.4%) and edging up in June (+0.3%).

Moderate declines were also observed in the general merchandise stores (-0.7%), miscellaneous retailers (-0.6%), and clothing and accessories stores (-0.5%) sectors.

These declines were partially offset by increases in the furniture, home furnishings and electronics stores sector (+1.9%), as well as in the pharmacies and personal care stores sector (+0.9%).

In constant dollars, total retail sales fell 0.8% as well in July, indicating that prices had no effect on retail sales overall.

Sales in the automotive sector continue to decline

New car dealers (-2.8%), as well as used and recreational motor vehicle and parts dealers (-0.5%) posted a decrease in their sales in July. In the case of new car dealers, this second consecutive decline (- 3.5% in June) offset the gains observed in April and May 2007.

Gasoline station sales strengthened modestly (+0.7%) after the downturn recorded in June (-1.4%), which was the only decline recorded since January 2007.

Declines in sales in most other sectors

In the food and beverage stores sector, sales in supermarkets fell 1.2%. This was the first decline since January 2007. Beer, wine and liquor store sales declined 2.3% after strong increases during the first two quarters of 2007, while sales in convenience and specialty food stores increased 0.3%.

The sales decline in the building and outdoor home supplies stores sector (-1.1%) in July was mainly due to lower sales in home centres and hardware stores (-0.9%) for the second consecutive month, as well as in specialized building material and garden stores (-1.8%). Housing starts declined in June (-4.2%) and July (-4.3%), according to data from the Canada Mortgage and Housing Corporation.

The furniture, home furnishings and electronics stores sector rebounded (+1.9%), offsetting the decline in sales observed in the previous two months. This was the second largest increase since the beginning of the year, attributable to a significant recovery in sales by furniture stores (+2.3%) and home electronics and appliance stores (+2.1%). These stores outperformed computer and software stores (-0.9%), whose sales had declined in the previous three months.

In the pharmacies and personal care stores sector, the gain of 0.9% in July completely offset the sector's decline of 0.7% in June.

Slowdown in automotive sector sales mainly in Ontario and Quebec

Ontario (-1.9%) and Quebec (-0.7%) accounted for most of the decline in retail sales in July, with the automotive sector leading the decline. The decrease in Quebec followed the strongest quarterly growth since the third quarter of 2000. In Ontario, the decrease followed a strong quarterly growth unmatched since the first quarter of 2002.

According to the New Motor Vehicle Sales Survey, there was a 2.7% downturn in sales of new motor vehicles in July. The decrease in new motor vehicle sales in Quebec (-5.7%) and Ontario (-3.1%) was mainly responsible for the nationwide decline in July sales, representing over 90% of the total decline.

The other provinces and territories in which retail sales declined were Yukon (-3.3%), Newfoundland and Labrador (-1.0%), Alberta (-0.2%), New Brunswick (-0.2%) and Nunavut (-0.1%). Sales in British Columbia remained stable, as they had the previous month.

Among the provinces, Nova Scotia (+2.0%) and Saskatchewan (+1.1%) experienced the sharpest rise in retail sales in July. Of the territories, the Northwest Territories alone experienced retail sales growth (+4.5%) in July.

Related indicators for August

According to Labour Force Survey estimates, employment grew slightly in August by 0.1% or 23,000, mainly the result of a rise in part-time work. The country's unemployment rate remained stable at 6.0%, its lowest level in 33 years.

Preliminary data from the automotive industry indicate that new motor vehicle sales increased 3% in August.

According to the Canada Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts was up in August. It advanced from 215,600 units in July to 226,500 units in August, a growth rate of 5.1%, offsetting the decline of 4.3% in July.

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

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

The July 2007 issue of Retail Trade (63-005-XWE, free) will soon be available.

August data on retail trade will be released on October 23.

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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