Auto sales continue to lead retail growth

Retail sales were up in February, with Canadians willing to make large purchases.

Canadian retail sales were up again in February, bolstered by a leap-year bonus day and surging car sales, retail consultant Ed Strapagiel says in his latest analysis of StatsCan data.

After a 14.2% jump in the first month of 2016, new car sales were up 19.2% in February over the same period last year. Along with a 16.7% year-over-year gain in building and garden material, possibly inspired by an early spring in many parts of the country, the hot car market helped lift February’s overall retail sales to “a sizzling” 6.9% over February 2015, Strapagiel writes.

It was also a strong month for certain segments of the store merchandise sector. Sales at shoe stores were up 18% over last year, continuing after a strong January, and clothing sales rose 13.2%. Furniture and home furnishings stores saw a 13.3% year-over-year increase.

Electronics and appliance stores, whose sales were down 7.8% in January from 2015 numbers, were still low in February, down 2.2% from the same period last year.

Food and drug sales recovered after a slight decrease last month, a shift Strapagiel characterizes as “more of a correction rather than a resurrection.” Health and personal care stores led the way in the category with a 9.7% jump – their highest single-month gain in almost six years, he writes.

After a drop in January, supermarkets and grocery stores were up 1.5% in February, movement Strapagiel calls “sluggish.”

But it was cars that once again stole the show. Growth in used car sales exceeded new ones, showing a 26.7% gain year-over-year, and other motor vehicle dealers were up 11.3%. The car categories, which make up about one-quarter of all Canadian retail sales, pulled up the average.

“Perhaps in large measure due to cheap financing, vehicle sales keep booming in Canada. It’s tough to see when this might calm down to more normal levels,” Strapagiel says in his analysis. “Nevertheless, it does say that Canadians are still willing to commit to major purchases.”