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Statistics Canada says retail sales fell 0.1 per cent in September

Retail sales drop

Retail sales fell 0.1 per cent in September to $51.6 billion, weighed down by lower sales at motor vehicle and parts dealers and gasoline stations, Statistics Canada said Friday.

The result matched the expectations of economists, according to financial markets data firm Refinitiv.

"All told, the Canadian consumer continues to look a bit tired, and the broader economy remains on pace for slightly below potential growth in the near term," said Robert Kavcic, a senior economist at the Bank of Montreal.

The overall decline came as sales in the motor vehicle and parts dealers subsector fell one per cent due to a 1.9 per cent drop at new car dealers. Sales at gasoline stations fell 2.3 per cent, due in part to lower prices.

Statistics Canada says excluding these two subsectors, retail sales rose 0.7 per cent.

"The ongoing strength in Canadian labour markets, the recent momentum in housing markets and wages, and the downshift in borrowing rates may have provided a modest lift to consumer spending," TD Bank economist Omar Abdelrahman wrote in a report.

"Still, elevated household debt levels and associated debt-servicing costs will continue to cap any meaningful acceleration in retail sales or consumer spending.

Sales at food and beverage stores rose 1.2 per cent, boosted by a 1.1 per cent increase at supermarkets and other grocery stores and a 3.2 per cent increase at beer, wine and liquor stores. Building material and garden equipment and supplies dealers saw sales rise 3.3 per cent.

Overall retail sales in volume terms fell 0.1 per cent.

The retail sales figures come ahead of wholesale trade results for September to be released on Monday and a reading of gross domestic product for both September and the third quarter as a whole out on Nov. 29.

The Canadian economy set a blistering pace in the second quarter, but economists expect growth slowed in the third quarter amid evidence of a slowing global economy, hurt by the U.S.-China trade war.



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