Canadian retail continues to slow

And with a possible global recession now on the horizon, retail analyst Ed Strapagiel reports the end of 2018 was mostly cloudy.

Speculation about whether the world will plunge into a recession this year has been gaining steam lately and the latest retail sales data does not allay those fears.

Total retail sales increased a mere 0.4% year-over-year for the three months ending January 2019, the weakest consecutive three-month performance in six years, according to an analysis of Statistics Canada data by Ed Strapagiel.

Global forecast
Canada’s retail sector has been on a downward slide as of late and the StatsCan trend lines mirror the downward trajectory of the global economy in general. Recently, the International Monetary Fund’s (IMF) managing director Christine Lagarde acknowledged a global slowdown, but insisted a slide into a recession is unlikely. Yet, Moody’s Analytics Chief Economist Mark Zandi said a worldwide recession is “highly likely” if America and China can’t reach a trade agreement soon.

Cloudy Canadian outlook
Retail sales growth in the store merchandise sector was a modest 1.2% for the three months ending January 2019. Strapagiel points out several retail categories appear to be struggling, with electronics and appliance store sales down 8.8%, while sporting goods, hobby, book and music stores were down 3.5%, for the 3 months ending January 2019 year-over-year. Meanwhile, jewellery, luggage and leather goods stores were down 2.2% and home furnishings stores were down 1.7%.

A rainbow among the clouds
The only sector to see a significant gain was food and drug retail sales, which gained 2.4% year-over-year for the three months ending January 2019. Supermarkets and grocery stores appear to be behind the growth, with 3% growth during that time period, says Strapagiel in his quarterly report. As an aside, health and personal care stores gained a mere 0.1%, year-over-year.

New sector on a high
Recreational marijuana is now legal in Canada and the brand new category is seen as the main driver of growth for what’s categorized as miscellaneous store retailers (and also include florists, office supplies, stationery and gift stores), which saw a retail sales growth of 9.7%, compared to the year before.

E-comm also rising
E-commerce was about 2.9% of total Canadian retail sales, which includes online-only retailers as well as bricks-and-mortar retailers who also sell some products online. Though this does not represent all e-comm purchases, as foreign websites are not included in these StatsCan figures. Canadian e-comm sales rose 11.6% during late 2018, while this is the lowest growth recorded since StatsCan started tracking this category in early 2016.