Strong Q1 for Canadian Retail Sales
Total Canadian retail sales were up a solid 5.5% on a not seasonally adjusted basis in Q1 2016 versus a year ago, according to the latest Statistics Canada numbers. It was the strongest Q1 (or any other calendar quarter, for that matter) in 6 years. The 3 month growth trend (orange line in the above chart) has spiked upward, and the underlying 12 month trend (green line) is improving.
Easter was in March this year, versus April in 2015, and February had an extra day due to 2016 being a leap year. But this is not enough to explain the jump. Gains were also broadly based, with above average retail sales growth at drug stores, shoe stores, home improvement retailers, and new car dealers.
The main push for Q1 actually occurred in February, which had an unusually high year-over-year sales growth of 7.5% (revised upward from initial reports). Things came back down to earth somewhat in March, with retail sales gaining a decent but more modest 4.7% versus a year ago.
Looking ahead, it's difficult to foresee that these levels of retail sales growth can be sustained. The Canadian economy just isn't up to it.
Store Retail consists of food plus drugs plus merchandise stores, and excludes the volatile automotive & related sector.
The chart above shows an upward spike for the 3 months ending March (a 5 year high in fact), and a modest improvement in the underlying 12 month trend. It may not last, but it's a great way to start the year.
Food & Drug
Retail sales growth in the Food & Drug sector improved in Q1, although not as dramatically as for some other retailers.
Health & personal care stores led the way in Q1 with retail sales up 8.2%. This was exceptional and the highest 3 month gain in almost 8 years. Beer, wine & liquor stores also had a strong Q1 with retail sales up 7.6% versus a year ago.
Supermarkets & other grocery stores however are still the laggards in this sector. Retail sales were up just 1.2% in Q1, which is mostly just inflation.
The Store Merchandise sector was up 6.4% year-over-year in retail sales for Q1 2016. This was the strongest Q1 gain in 6 years, and compares to a 3.9% annual gain for all of 2015.
Many retailer types had high sales gains in Q1, including shoe stores (up 13.4% year-over-year), building material & garden equipment/supplies dealers (+10.7%), and clothing stores (+8.8%). Almost all other retailers in the sector had at least somewhat above average Q1 sales increases, with the major exception of electronics & appliance stores at down 3.8%.
Note that Statistics Canada is now suppressing the breakdown of general merchandise stores for confidentiality reasons. The figures in the table below are estimates based on previous trends.
Automotive & Related
Automobile dealers' sales continue to perform at a high level, up 15.0% in Q1 2016 year-over-year, almost 3 times higher than the rest of Canadian retail. This has the effect of pulling up the overall growth rate, as auto dealers represent about 22% of total Canadian retail.
On the other hand, this is being offset at gasoline stations, where sales were down 9.4% for the quarter. This sales decline is actually an improvement – in Q1 last year, their sales were down almost 20%.
By The Numbers
For definitions of store types, see Statistics Canada.
Monthly Update Notification
This analysis is updated monthly as new numbers are published by Statistics Canada. If you would like notification of when an update becomes available (and you've read this far), please connect with Ed Strapagiel on LinkedIn.
22 May 2016