OTTAWA – Stronger than expected holiday shopping helped boost retail sales better than expected to 0.2 per cent in Canada in November, providing a needed boost to the soft economic environment at the end of last year.
The bigger surprise was that in volume terms, sales jumped 0.8 per cent from the previous month, which along with a previously reported increase in wholesale activity, likely puts the month on a positive growth track.
Capital Economics estimated November’s real gross domestic product likely grew by about 0.3 per cent, setting up a fourth quarter advance of between one and 1.5 per cent.
“The introduction of Black Friday and Cyber Monday shopping in Canada, which has traditionally marked the beginning of the holiday shopping season in the U.S., helped spur Canadian sales,” said David Madani, Capital Economics’ chief Canadian economist.
Analysts had expected a flat reading in November, and noted that after a downward revision in October, sales are only up 1.4 per cent on a year-to-year basis, about one third of the growth levels recorded in the United States.
The prospects going forward are for continued weak retail sales, given that Canadians appear to be tapped out after several years of borrowing to support purchases of everything from homes to cars to appliances.
With household debt levels at an all-time high of 165 per cent of income, a new national survey conducted for the Canadian Institute of Chartered Accounts suggests that Canadians are beginning to heed warnings about high debt.
The survey found half of respondents say they were experiencing money worries and placed reducing debt and reducing interest payments as a high priority. As well, six in 10 said they planned to restrict future purchases to what they can afford.
Statistics Canada said sales gains were reported in only four of 11 subsectors, representing one third of retail trade.
But there was growth in some key industries, including a 1.8 per cent pickup in motor vehicles and parts, with sales at new car dealership rising for the sixth straight month. There were also advances at electronics and appliance stores, improving by 8.9 per cent.
Gas station sales declined 2.3 per cent, but that mainly reflected lower gas prices. While sales of building material and garden equipment and supplies were off 1.4 per cent, the fourth consecutive decline.
While not strong, the growth in the retail sector serves somewhat as a counter-balance to poor exporter and manufacturing numbers, which have kept growth muted throughout the second half of 2012.
The Bank of Canada is expected to revise downward its estimate for economic performance both for 2012 and this year when it issues its latest forecast on Wednesday morning.