MNI INTERVIEW: Online U.S. Sales A Data Challenge For StatsCan

By Greg Quinn

     OTTAWA (MNI) - Statistics Canada is refining how it tracks the growing

popularity of retail sales through U.S. websites, a top official told MNI, a

trend making it hard for the Bank of Canada to assess whether a slowing economy

needs lower interest rates.

     Greg Peterson, assistant chief statistician for economics, said dollars

spent online are harder than store purchases to categorize as retail sales or

other fulfilment services. It is also not always clear what parts of a sale

happen in Canada versus the U.S., he said.

     Statistics Canada is working with international partners like the U.S.

Bureau of Economic Analysis to improve the measurement of digital

transformation. Other challenges include how online retailers can change prices

faster than stores and how technologies like artificial intelligence alter the

performance of firms within an industry, he said.

     "There's a gap between retail sales and overall personal expenditure,"

Peterson said in an interview on Jan. 31. "And the measurement challenge there

is how do you measure sales over a platform that may not be located within

Canada, where all of the fulfilment may happen within Canada."

     The question has immediate practical value with the BOC considering a cut

to the G7's highest policy interest rate on signs consumer confidence is fading.

Governor Stephen Poloz told reporters last month a slowdown may be overstated

with retail sales data missing "very strong" holiday online purchases.

     "One (question) for sure is kind of the macroeconomic-type things that the

Governor was talking about," Peterson said. "Are we properly allocating the

right activity to the right industry for instance?"

     Household spending has led Canada's economy since the global financial

crisis more than a decade ago. One reason Poloz resisted cutting rates is the

record build-up of consumer debt and signs the Toronto and Vancouver housing

markets are heating up again.

     Canada began tracking online sales two decades ago, one of the first

nations to do so, Peterson said. The latest unadjusted retail figures show sales

rose 1.6% in November from a year earlier to C$53.1 billion, and e-shopping and

mail-order business by 21% to C$1.8 billion.

     --VALUE OF COMPANIES' DATA

     Statistics bureaus worldwide are working to keep up with the digital

economy, and StatsCan will overhaul national accounts to incorporate missing

items like the value of the data companies amass to improve sales and output,

Peterson said. Across economic statistics, he is looking for ways to tap into

data gathered by other administrators in a shift away from telephone and paper

surveys.

     According to the agency's departmental plans report, "the use of scanner

data, web scraping, machine learning and crowdsourcing is being looked at to

eventually replace traditional collection methods in many of the economic

statistics programs." That would be a big change for an agency Peterson points

out can trace its first census back to 1666.

     Canada's consumer price index is holding up well in an age of digital

disruption and a rush of new goods and services, Peterson said. "We do update

the basket regularly, and many of the indices that we produce, we are making

those quality adjustments to reflect that technological change. So, on the

prices side, I'm a little less concerned about whether or not we're capturing

the full effects of that transformation."

     Another area where consumer behavior could be shifting in hard-to-track

ways is linked to the rise of the "gig" economy, he said.

     "If you think about digital platforms, for sure it has an impact on

enabling the gig economy," he said. "Are there income distribution effects

associated with people participating in a gig economy, and other social impacts

as well?"

     "Increasingly, all issues are horizontal, right? And you can't

compartmentalize anything into a macroeconomic bucket, or a microeconomic

bucket, there are broader impacts as well."

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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