Retail activity rolled back again in March
Early signs of weakness in consumer spending have started to appear
By Rob Roach, ATB Economics 23 May 2023 1 min read
Consumers are starting to pullback following a run-up in retail sales in the latter part of 2022.
After hitting an all-time record in January, seasonally-adjusted retail sales in Alberta contracted for the second month in a row in March. The decline was driven by lower spending at motor vehicle and parts dealers, one of the more volatile components of retail sales.
A 2.0% drop in February was followed by a decline of 1.3% in March.
That said, Albertans have been resilient spenders in the face of rising interest rates.
On a year-to-date basis, sales in the first quarter were over 9.1% (or $1.9 billion) higher than over the same period in 2022 (unadjusted for seasonality). This is well ahead of the 4% increase in consumer price inflation over this period and far exceeds the national increase of 3.8%
Nationally, retail sales also fell for the second month in a row.
After ticking down 0.2% in February, national sales dropped by 1.4% in March.
Retail sales took a step back in every province, except in B.C., with Ontario posting the largest decrease at -1.7%.
Statistics Canada’s advance estimate for April shows a modest 0.2% increase in national retail sales, but it is “unofficial” and based on only 38% of companies surveyed compared to an average final response over the previous 12 months of 89%.
It’s still early days in terms of establishing a clear trend, but the fact that national retail sales declined in both February and March means there is, at least for now and in terms of this particular indicator, less pressure on the Bank of Canada to raise interest rates following April’s higher-than-expected inflation reading.
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