OTTAWA: After four straight months of buying, Canadian shoppers seemed to keep their wallets at home in December as retail sales shrank by 0.5 per cent. Statistics Canada reported Wednesday that nine of 11 categories the data agency tracks saw lower sales. The two exceptions were gas stations, and building material and garden equipment and supplies dealers, where sales rose. “Shoppers apparently did much their holiday shopping a bit early,” BMO economist Benjamin Reitzes said. Eight out of 10 provinces saw declines. Only Alberta (up 1.1 per cent) and Saskatchewan (up 1.2 per cent) managed to buck the trend, Reitzes noted. Counterintuitively, retail sales have declined in December in each of the last five years, which suggests some “seasonality issues” with how and when people are doing their holiday shopping, Reitzes said.
December seems to have been “a down month in a good quarter occurred because sales were brought forward to earlier in the season,” Scotiabank economist Derek Holt said. “Apparently I’m in the minority of people who didn’t shop early for Christmas!” Indeed, stores typically associated with holiday buying fared especially poorly, with clothing and clothing accessories stores down 3.7 per cent, general merchandise stores down 1.3 per cent, sales of electronics down 2.3 per cent and sales of sporting goods, hobby, book and music stores declined 0.5 per cent. Holt says higher debt levels, higher taxes for high income earners, and higher mortgage rates could all be “headwinds” for consumer spending moving forward. “There’s no denying this is a soft report,” Reitzes said. “But, given the apparent seasonality and the fact that the drop in volumes comes after a very strong run, it doesn’t change the broader story that the economy is performing better than most thought just a few months ago.”
