Debt-shy Canadians “reluctant spenders” in early 2013, though clothing sector sees growth
Canadian shoppers bought more, but benefited from lower prices in March as retail sales were flat for the month, Statistics Canada said Wednesday.
Retail sales for the month amounted to $39.5 billion, the same as a revised figure for February, as lower prices, especially for gasoline, offset a 0.7% increase in sales volumes.
The results compared with expectations by economists for sales to rise 0.2%.
“Challenged by sluggish income gains and unwilling to significantly grow non-mortgage debt, Canadians have been reluctant spenders at the stores of late,” CIBC chief economists Avery Shenfeld said in a note.
“But a big drop in gasoline prices enabled retail volumes to jump 0.7% in March, despite an overall flat level of expenditures.”
Shenfeld estimated that retail sales for the first quarter of the year came in at an annual pace of 1.8%, double the rate in the final quarter of 2012.
Statistics Canada said higher sales were reported in six of 11 subsectors, representing 47% of total retail sales.
The largest increase in sales was a 3.1% rise at clothing and clothing accessories stores, while sales at motor vehicle and parts dealers rose 0.7% for a third consecutive monthly gain.
Gasoline station sales decreased 1.3% in March, mainly reflecting lower prices at the pump.
Sales at motor vehicle and auto parts dealers rose 0.7%, helped by increased sales of recreational vehicles, motorcycles and boats and new cars and trucks.
Furniture and home furnishings stores gained 0.3%, helped by stronger furniture sales. Building material and garden equipment and supplier sales edged up 0.1%.
Retail sales rose in six provinces in March, with Ontario reporting the largest increase of 0.4% in dollar terms.
TD Bank economist Dina Ignjatovic said the increase in first-quarter retail sales from the end of last year will help boost GDP for the quarter.
“Indeed, consumer spending is now tracking 2.0% in Q1, which will help lift real GDP to the 2.0-2.5 per cent range during the quarter,” Ignjatovic wrote.
“Going forward, consumer spending growth is likely to remain just shy of 2 per cent, as employment growth is expected to be lacklustre and households work to rein in their debt.”
