Retail sales in August disappointing

Retail sales in Canada rose 0.3 per cent to $39.1 billion in August, Statistic Canada reported Tuesday, disappointing economists even though the numbers met consensus forecasts.

"Digging beneath the surface, the impact on GDP looks disappointing, as in real terms, sales volumes were down 0.3 per cent, with all of the rise in nominal sales therefore attributable to inflation, including a 2.9 per cent rise in gas station sales," Avery Shenfeld, CIBC World Markets chief economist, wrote in a commentary.

"Sales were otherwise mixed across sectors, with gains in general merchandise but a drop in clothing, health and autos," Shenfeld said.

Statistic Canada said sales at general merchandise stores increased for a second consecutive month, up 0.6 per cent.

However, department store sales edged up just 0.2 per cent while those at miscellaneous retailers declined for a second month in a row, falling 3.1 per cent.

Overall, gains were reported in five of 11 subsectors, representing 53 per cent of total retail trade.

Robert Kavcic, senior economist at BMO Capital Markets, also noted that "underlying spending, excluding autos and gas, was somewhat disappointing, falling 0.1 per cent and continuing the choppy performance seen in recent months."

Sales at furniture and building products stores, down 0.1 and 0.4 per cent respectively, were consistent with softening housing market trends, Kavcic added.

B.C. a weak spot

Regionally, British Columbia was the weak spot in August, with retail sales falling 0.9 per cent amid declines in housing-related sectors, Kavcic said, noting that the recent housing sales slump hit that province the hardest.

It was the fifth decline in retail sales in B.C. in the last six months, Statistic Canada said.

The Prairies and Ontario were strong spots, with Alberta (up 0.4 per cent) and Saskatchewan (up 0.6 per cent) continuing to show the strongest consumer spending trends in the country, with retail sales growth running at 8.1 and 9.3 per cent respectively year over year, Kavcic said.

Both provinces are fuelled by healthy labour markets and strong population growth, he said.

Ontario, where retail sales were up 0.6 per cent, reported the biggest gain in overall dollar terms in August, while Nova Scotia showed an impressive gain of 2.8 per cent, which Statistics Canada said was widespread across store types.

Newfoundland and Labrador also did better than most with a 1.0 per cent gain, its sixth increase in retail sales in seven months.

Quebec posted a 0.2 per cent gain.

Besides British Columbia, other provinces showing decreases were Prince Edward Island, down 0.1 per cent; New Brunswick, down 0.7 per cent, and Manitoba, down 0.4 per cent.