By Robb M. Stewart
OTTAWA--Retailers in Canada looked to have enjoyed a strong pickup in sales at the end of last year, recovering from a lull the month before as a federal tax holiday kicked off.
An advance estimate of retail receipts indicates sales climbed 1.6% in December, Statistics Canada said Thursday. That would mark the strongest month for the industry since January 2023, coinciding with the start of a two-month tax break on certain purchases and the peak weeks of shopping over the winter holidays.
Sales in November were essentially unchanged from the month before at a seasonally adjusted 67.57 billion Canadian dollars, the equivalent of about US$47 billion. Compared with a year earlier, retailers saw a 1.6% rise in sales.
Statistics Canada offered no details with the estimate for December, which was based on the responses of roughly 48% of retailers surveyed and will be revised.
Before November's softness, sales were up for four months running, the longest stretch of gains for retailers since early 2022 when pandemic lockdowns were lifted.
Household spending has been buoyed in part by back-to-back interest rate cuts since June, helping counter weakness in business investment and exports. Still, the apparent resilience among households comes even as increasing numbers of Canadians say they are struggling with the still-high cost of living.
The tax holiday on things including restaurant meals, alcohol and toys that began mid-December is expected to temporarily lift consumption through February when the break ends.
Data released earlier in the week showed annual inflation cooled for a second month running in December, thanks to the tax break, and has now been at or below the Bank of Canada's 2% target five months running. Economists expect that leaves room for the central bank to again lower its policy rate next week.
The sales tax suspension may have nudged spending later into the holiday-shopping period, Royal Bank of Canada economist Carrie Freestone said. The lender's tracking of card transactions found there was a jump in spending in December after a pullback the month before, with Canadians laying out last month for clothing, shoes, furniture, electronics, gas and building materials.
The flatlining of sales in Novemmber was in line with Statistics Canada's projection last month, but softer than the 0.2% growth expected by economists.
Six of nine retail sectors tracked by the data agency logged lower sales for the month, with car dealers and gas stations as outliers.
Motor vehicle and parts dealers saw the strongest sales increase in November, with new car sales up for a fourth month in the last five. Gas stations saw a pickup in trade after six months running of declines.
Core sales, which exclude car and auto-parts dealers and gas stations, were down 1.0% from October. Supermarket and grocery store sales led the decline, and lower receipts were recorded by beer, wine and liquor retailers for a second month in a row.
E-commerce sales were down 1.2% at C$4.11 billion for November, when a strike by tens of thousands of postal workers across Canada began and halted deliveries.
In volume terms, price-adjusted sales fell 0.4% from October but were up 0.8% from a year earlier.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
01-23-25 0855ET
