Canada Retail Sales Disappoint: Core Measure Drops 0.5% in October, Signaling Soft Consumer Demand

In October, headline sales fell 0.2% month over month to C$69.4 billion, underperforming expectations for flat growth, indicating declining retail sales in Canada. Excluding automobiles and fuel, the more revealing core retail sales measure declined 0.5%, indicating a second straight monthly fall and emphasizing waning underlying consumer demand in spite of earlier tenacity.

A significant 2.0% decrease in food and drink merchants was mostly responsible for the core decrease; this was made worse by a 10.6% fall in beer, wine, and liquor stores related to labour problems in British Columbia. Weaknesses also arose from health and personal care stores (-0.3%) and clothing merchants (-0.7%), only partly balanced by a 1.1% increase in appliances, furnishings, and electronics.

Looking forward, Statistics Canada's initial projection points to a strong 1.2% increase in November's retail sales, which may alleviate worries over persistent consumer sluggishness and provide hope for a recovery entering into the all-important holiday shopping season