Canadian retail sales jumped in February, the first increase after three months of decline, but economists warn that consumer spending remains challenged by a slowing housing market and high debt burden.
Retail sales increased 0.8 per cent in February to $50.6 billion, according to Statistics Canada data released Thursday. The boost was largely due to higher pricing. Excluding motor vehicle and parts sales, sales increased 0.6 per cent from last month. When discounting the effects of price changes, retail sales were up just 0.2 per cent by volume.
“Retail sales posted a healthy advance in February, but that’s where the good news ended,” CIBC economist Royce Mendes wrote in a note on Thursday.
“(Sales) in real terms turned out to show a much more modest advance. As a result, the overall picture on consumption remains largely the same, with households facing a challenging environment as rates have risen.”
Declining retails sales in Canada over the last several months have led to concerns about tepid consumer spending. Despite February’s numbers being the first gain since October, BMO Capital Markets economist Benjamin Reitzes noted that sales in remain “quite subdued as a slowing housing market, higher interest rates and an elevated burden contain consumer spending.”
Sales were up in five of 11 sectors, including general merchandise stores and motor vehicle and parts dealers, representing 73 per cent of retail trade. Sales fell 1.6 per cent at clothing and accessories stores, and 3.5 per cent at electronics and appliance stores. Cannabis stores also saw sales decline 9.1 per cent from $55 million in January to $50 million February.