Retail sales down 0.3 per cent in August, second consecutive drop

OTTAWA – Retail sales in Canada unexpectedly fell 0.3 per cent in August to $42.4 billion, marking the second consecutive monthly drop, dragged lower by falling gasoline prices.

Economists had expected retail sales to hold steady, according to Thomson Reuters.

“Canadian consumers are taking a bit of a breather after going on a shopping spree in the second quarter,” BMO Capital Markets senior economist Benjamin Reitzes wrote in a note to clients.

“But before becoming too downbeat, retail volumes are still expected to see a decent gain for the quarter despite the softness in July and August.”

Statistics Canada said Wednesday that August retail sales were down in seven of 11 subsectors, representing 76 per cent of retail trade. Excluding motor vehicle and parts dealers, sales were down 0.3 per cent, matching the overall decrease.

The biggest drop was seen in sales at gas stations as they fell 2.1 per cent to their lowest level since late 2013, mainly due to lower prices at the pump. Excluding gas stations as well as the motor vehicle and parts dealers sector, August sales were up 0.1 per cent.

Other areas showing weakness for the month included sales at furniture and home furnishing stores, which fell 1.8 per cent, while food and beverage stores saw sales slip 0.4 per cent.

Building material and garden equipment and supplies dealers saw sales drop 1.8 per cent, while sporting goods, hobby, book and music stores lost 0.2 per cent.

Meanwhile, sales at stores traditionally associated with back-to-school sales stepped higher in August.

Sales at general merchandise stores, which includes department stores, were up 1.8 per cent, while clothing and clothing accessories stores rose 1.1 per cent.

Electronics and appliance stores gained 1.1 per cent.

Retail sales were down in six provinces in August, with lower sales in Ontario and, to a lesser extent, Alberta, accounting for most of the decrease.