Canadian retail hits six-year high to start 2016

Ed Strapagiel's latest analysis shows sales surged across many segments, but are the good times here to stay?
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Analyst Ed Strapagiel’s latest breakdown of Statistics Canada’s retail numbers show a surprising spike across multiple categories in Q1 2016.

Total retail sales were up 5.5% in Q1 versus a year ago, the strongest quarter for growth in six years. Sales were particularly strong in February, which saw 7.5% year-over-year sales growth, before going back down to 4.7% in March.

The gains were experienced across nearly all sectors. Automotive sales continue to surge, posting 15% sales growth year-over-year, which Strapagiel points out is almost three times higher than the the rest of Canadian retail. That surge is only partially offset by gasoline sales, which were down 9.4%, although that is an improvement from Q1 last year, when they were down almost 20%.

The store retail segment saw 5.2% sales growth for the quarter, led by an eight-year high for health and personal care (8.2%), with strong performances for beer, wine and liquor (7.6%), clothing (8.8%), shoes (13.4%), furniture (8.3%), building material and gardening (10.7%) and sporting goods (8.2%). Overall store merchandise sales (retail that excludes automotive, food and health) were up 6.4% year-over-year, a six-year high and surging past the 3.9% gain the segment experienced for all of 2015.

Electronics and appliance stores were the only segment to post a loss, down 3.8% compared to last year, while grocery stores only saw a 1.2% gain.

Despite the strong start to 2016, Strapagiel says it’s difficult to predict whether or not a weaker Canadian economy will be able to sustain these trends in the following quarter. Alberta, which has been hit hardest by economic downtown, was the only province to post negative growth, with 1.6% shrinkage in Q1 sales compared to the year prior and 4.1% over the last 12 months. Neighbouring Saskatchewan only posted 1% sales growth year-over-year, with a 2.1% loss over the last 12 months.

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