Retail trade

Wednesday, November 21, 2007

Retail sales edged down 0.2% in September to an estimated $34.4 billion, due mainly to a decline in sales by new car dealers. This is the third decrease in overall sales since May 2007. Since 2004, retail sales have generally been rising at a rapid clip.

Excluding sales by dealers of new, used and recreational vehicles and auto parts, retail sales increased by 0.1% in September.

Sales in the automotive sector declined 0.7% in September. This decline is primarily due to a 1.3% decrease in sales by new car dealers. This is the third monthly decrease since the strong increase of 4.1% observed in May 2007.

The second largest decrease was observed in furniture, home furnishings and electronics stores (-2.2%). This drop is mainly due to home electronics and appliance stores (-4.2%), which saw their sales decline for the first time since April 2006.

The other sectors that were down in September were clothing and accessories stores (-0.8%) and the miscellaneous retailers group (-0.2%).

Increases were recorded in food and beverage stores (+0.6%), general merchandise stores (+0.4%), pharmacies and personal care stores (+0.4%) and building and outdoor home supplies stores (+0.1%).

The slight decrease in total sales in September, coupled with an offsetting gain and loss in July (-0.8%) and August (+0.7%), yielded a slight decline (-0.3%) in the third quarter of 2007. This slight quarterly decline is primarily due to a 2.3% drop in sales in the automotive sector. The drop in retail store sales observed in the third quarter of 2007, the first decrease observed since the fourth quarter of 2003, follows two consecutive quarters of growth exceeding 2.0%.

In constant dollars, total retail sales decreased by 0.5% in September, indicating that there was a slight price effect. According to the Consumer Price Index (CPI), in addition to a 0.8% rise in gasoline prices, prices for vehicle purchases and leases also rose 1.1%.

Sales by new car dealers weaken in September

The sales decrease of 1.3% in September by new car dealers is primarily attributable to a 4.1% drop in truck sales, according to the New Motor Vehicle Sales Survey. In this survey, trucks include mini-vans, sport utility vehicles, light and heavy trucks, vans and buses.

Dealers of used and recreational motor vehicles and parts posted a fourth straight monthly decline in their sales (-1.7%) in September. These declines follow a period of strong growth that began in early 2006.

Gasoline stations saw their sales rise 0.9% due to a 0.8% increase in the price of gasoline, according to the CPI. Since the decline in sales observed in September 2006, the trend has generally been upward.

Sales excluding automotive were mostly offsetting within sectors

The decrease in sales in September in furniture, home furnishings and electronics stores (-2.2%) was the largest observed since May 2005 (-2.5%). It did not, however, manage to cancel the gains made during the two previous months.

In addition to the drop in sales by home electronics and appliance stores, furniture stores were close behind with a decline of 1.1%, cancelling a good portion of the gains made during the two previous months. Home furnishings stores saw their sales rise (+0.9%) for the fourth straight month in September, while sales at computer and software stores dropped (-5.2%) for the third time in the last four months.

The decline in sales in September for clothing and accessories stores did not cancel the gains made in the two previous months. Clothing stores and shoe, clothing accessories and jewellery stores saw their sales fall 0.8%. Overall, clothing store sales have maintained an upward trend since early 2006.

The rise in sales for the food and beverage sector (+0.6%) is mainly attributable to beer, wine and liquor stores (+1.5%) and supermarkets (+0.3%). These two trade groups saw their sales rise for a second straight month without, however, completely cancelling their respective declines in sales in July. This sector saw its sales fall 0.2% for the third quarter of 2007, the first quarterly decrease in sales observed since the first quarter of 2000. The CPI for food purchased in stores experienced its greatest quarterly decrease (-1.3%) since the third quarter of 1995.

Sales in general merchandise stores increased for the second consecutive month, up 0.4% in September. Sales in this sector have been growing steadily since early 2005.

September sales have remained relatively stable for home centres and hardware stores (+0.1%) and specialized building material and garden stores (-0.1%). In the third quarter of 2007, sales rose 1.7% in the building materials and outdoor home supplies stores sector, continuing a quarterly sales growth trend that has been uninterrupted since the first quarter of 2004.

Pharmacies and personal care stores showed an increase in sales in September (+0.4%), which, combined with the increases in the previous two months, generated 2.0% growth for the third quarter of 2007. This sector has not posted a quarterly drop in sales since the second quarter of 2000.

Sales decline in six provinces in September

Six provinces experienced a decline in retail sales in September. The greatest decline was recorded in Prince Edward Island (-1.6%), where sales dropped for the first time in five months. Alberta experienced a decrease (-1.0%) in retail sales for a third consecutive month.

Sales were down in Quebec (-0.5%) and Ontario (-0.2%) for the third time in the last four months. Moreover, these are the only two provinces to have experienced a decline for the third quarter in 2007. The 1.8% drop in third quarter retail sales in Quebec follows a quarterly growth of 3.2% that had been strongly influenced by the payout of a pay equity settlement to the province's public service sector. As for Ontario, the 0.5% decline in third quarter sales follows a strong second quarter, which showed the largest rate of growth (+2.5%) since the first quarter of 2002.

Saskatchewan posted the largest monthly gain (+1.9%), representing the sixth straight increase since the start of the year. With a 2.8% growth rate for the third quarter of 2007, sales in this province have shown rapid growth since early 2007.

Nova Scotia was the only Atlantic province to show a sales increase (+1.0%).

Related indicators for October

Employment in October continued its rise, with the estimated addition of 63,000 full- and part-time jobs. In addition, the unemployment rate dropped to a low of 5.8% for the first time in 33 years, down 0.1 of a percentage point compared with September.

Preliminary data on automotive industry sales indicate that the number of new motor vehicle sold in October dropped by 2.0% due to a decline in passenger car sales.

According to the Canada Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts dropped 22.0% in October to settle at 219,500 units, down from 281,300 units in September.

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

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

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

Data on retail trade for October will be released on December 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 Claude Bilodeau (613-951-1816), Distributive Trades Division.

Table(s).