Canadian retail growth cools off

Automotive sales took a steep tumble in July while growth in other sectors remains stable, but modest.

After a respectable second quarter, growth in Canadian retail sales slowed significantly in July as one of the biggest drivers of growth slips into decline, according to analysis from retail consultant Ed Strapagiel.

Canadian retail sales grew by 3.6% in Q2 of 2016, but July saw sales grow by only 0.2%, the lowest growth for any month so far this year.

The biggest reversal of fortunes was in the automotive sector, where nearly two years of gains that consistently outpaced most other sectors have turned into losses. While car sales saw 7.2% sales growth at the end of Q2, July saw new car sales decline by 1.4% and used car sale growth dropped from 13.1% to 3.3%.

Other motor vehicle dealers saw sales decline by 7.8% and parts and accessories store sales declined by 2.9%. Gasoline sales continue to struggle, declining by 8.8% in July, and without strong car sales to balance out poor fuel sales, the automotive sector as a whole saw sales decline by 3.9%.

Food and drug sales stayed on pace, with a 2.1% sales growth in July only slightly off the 2.7% growth in Q2. Health and personal care stores continue to be driving growth in the category, posting 4.7% growth, though that’s behind the 7.7% increase it saw in Q2. Grocery sales, which were flat last quarter, bounced back slightly to post a 1.5% sales growth, though another month of losses in specialty food (2.6%) have put that category’s sales growth into a 0.2% decline for the year-to-date. Beer, wine and liquor sales grew by 1.7% in July.

Store merchandise sales cooled compared to last quarter but still showed 3.1% growth, the leader across sectors. While the furniture category went from 4% growth in Q2 to a 0.8% loss in July and electronics and appliance stores slipped back into losses with a 1.3% decline, every other category posted at least modest growth. Leading the pack were sales in shoes (which grew by 8.8%), clothing (5.2%) and building supplies (4.5%).

Regionally, sales in Alberta continued to drop, declining by 6.2%, but now the province has some company: sales were in decline in Newfoundland and Labrador (6.1%), New Brunswick (5.4%), Saskatchewan (2.1%) and Manitoba (1.2%), as well as across the territories (4.7%). The highest growth was in British Columbia (4.5%), followed by P.E.I. (3.1%), Ontario (1.6%) and Quebec (1.3%).

Image courtesy Shutterstock