Zata Blog

Retail trade
March 2007

Retail sales surged in March, resulting in a strong first quarter. March’s gains were widespread with seven of eight retail sectors posting sales increases.

After two months of little change in sales growth, total retail sales rose 1.9% in March to an estimated $34.0 billion. The latest monthly increase helped retail sales in the first quarter of 2007 rise by 2.0%, marking a return to strong quarterly growth after a lacklustre fourth quarter of 2006.

Excluding sales by new, used and recreational vehicles and parts dealers, retail sales rose 1.1% in March, extending a string of advances by non-auto retailers to five months. In the first three months of 2007, sales of non-auto retailers rose 2.8% over the previous quarter. This was the strongest quarterly growth for this group of retailers since the series began in 1991. In the first quarter of 2007, there was robust growth in sales by gasoline stations (+7.5%), furniture, home furnishings and electronics stores (+3.5%), and pharmacies and personal care stores (+3.1%).

Of the seven retail sectors posting sales gains in March, the automotive sector (which includes gasoline stations) led the way with a 3.8% increase after two months of declines.

Significant advances were also posted by four other retail sectors. Miscellaneous retailers’ sales rose 2.9% to post the highest growth rate since January 2006, while clothing and accessories store sales climbed 1.5%. Furniture, home furnishings and electronics stores (+1.2%) enjoyed their fifth consecutive increase, and retail activity in the building and outdoor home supplies stores picked up in March (+1.0%) after declining in February.

Moderate gains were seen in the food and beverage stores (+0.8%) and the pharmacies and personal care stores (+0.6%) sectors.

Sales at general merchandise stores declined by 0.2% in March.

Once price changes were taken into account, total retail sales increased by 1.4% in March.

Seven of eight retail sectors posted higher sales in March

Sales at new car dealers jumped 5.1% in March, partly recovering from two consecutive monthly declines. However, as a result of the weak start to the year, sales for the first quarter of 2007 were down 1.3%.

Gasoline station sales rose 2.6% due to higher prices at the pump in March. Sales in the first quarter were up 7.5% over the final three months of 2006, partly reversing two consecutive quarterly declines.

Sales at used and recreational motor vehicles and parts dealers rose 1.2% in March, the fourth increase in the last five months.

In the clothing and accessories stores sector, clothing stores had a 1.7% increase in sales, recovering fully from a 1.5% decrease in sales in February. Shoe, clothing accessories and jewellery stores had sales rise a modest 0.7% after two months of declines.

Within the food and beverages stores sector, sales at supermarkets edged up 0.3% in March while beer, wine and liquor stores sales increased by 1.3%. Sales at convenience and specialty food stores rose 3.3% in March, leading to a 1.6% advance over the last quarter of 2006. Within this trade group, sales at specialty food stores continue to represent an increasing share of total sales, accounting for 42% of sales in 2006, up from 39% in 2005.

Sales picked up at home centres and hardware stores (+0.6%) and specialized building material and garden stores (+2.7%) after a lacklustre February. Warmer March temperatures may have revived sales in this sector. According to the Canadian Mortgage and Housing Corporation, housing starts were up by 9.2% in March over February.

Miscellaneous stores retailers (which includes retailers such as office supplies and stationary stores, gift, novelty and souvenir stores, and pet and pet supplies stores) registered gains of 2.7% in March after a 1.1% decline in February. Sales at these retailers have tended to fluctuate over the last 12 months around a generally flat trend. Sporting goods, hobby, music and book stores sales advanced 3.0% in March, extending a steady rise that has seen annual increases of over 6% in the previous two years.

In the furniture, home furnishings and electronics stores sector, sales at furniture stores rose 2.7%. Sales growth of 2.2% at home electronics and appliance stores marked the 11th consecutive monthly gain. The two smaller and more volatile trade groups in this sector posted declines in March, with home furnishings stores sales down 2.0% while computer and software stores sales were down 4.3%.

Strong gains in the Western provinces

March saw sales gains in all provinces except New Brunswick (-0.2%). Sales in the Western provinces were strong in March. Saskatchewan retailers led the way with sales gains of 5.6%, more than offsetting the 2.7% decline in February. Sales in Alberta were up 3.6% in March, closing the quarter with a 3.4% growth rate. Manitoba retailers posted their fourth increase in the last five months (+2.3%). Retail sales grew for the fourth consecutive month in British Columbia (+1.4%).

Sales in Ontario were up 2.1% in March, the fifth time in the last six months that sales exceeded the national average. In Quebec, sales rose by only 0.6%.

The Atlantic provinces saw a moderate retail sales increase of 0.4% while retail activity in the territories as a whole fell by 2.9%, mainly due to sales declines in the Yukon.

Related indicators for April

Estimates from the Labour Force Survey showed little overall change in employment in April. This follows strong employment gains since September 2006.

Preliminary sales figures from the automotive industry indicate that the number of new motor vehicles sold climbed 7% in April.

The seasonally adjusted annual rate of housing starts was 211,900 units in April, down from 214,000 units in March, according to Canada Mortgage and Housing Corporation.

-Source: Stats Can