MNI: Canada January Retail Sales Falter After Strong 2023

Canadian retail sales fell for the first time since August according to Statistics Canada's flash estimate for January, with the 0.4% decline following a stronger-than-expected gain of 0.9% for December.

Statistics Canada's report Thursday didn't include a breakdown of which sectors drove January's decrease. The December increase beat the consensus for a 0.8% gain and was led by motor vehicles and parts, which climbed 1.9% in the sector's fourth consecutive rise. Excluding autos and gasoline, sales rose 0.5%. 

The figures continue a pattern of mixed signals on consumer spending following the Bank of Canada's 10 interest-rate hikes, which Governor Tiff Macklem has said should be enough to restore price stability. 

Consumers continue to defy bets on a hard landing with retail sales up 2.2% in 2023 even amid the toughest rate-hike campaign in a generation. The figure was largely driven by motor vehicles and parts, which increased 7%, as supply chain issues that created pent-up demand were resolved. Core retails rose 2.4% last year from food and beverage retailers as well as health and personal care. 

After removing price changes such as a 0.9% gain at gasoline stations, December's volume of sales rose 0.8%. That measure is a closer indication of the contribution to gross domestic product.

Statistics Canada also revised November retail sales up to 0% from the decline of 0.2% initially reported, bringing the fourth quarter sales increase to 1%.