Retail tales

It's practically a number from another era, but today's Statistics Canada report on retail sales for November is still worth a look. Retail trade rose 1.3 percent in the month (1.1 percent in volume terms). That was the seventh straight monthly rise, and put put retail sales 5 percent higher than their pre-pandemic level or a remarkable 7.1 percent higher year-on-year.  The strength in this sector hints at the effectiveness of the measures the Federal Government has taken to support household finances.* 

Some media commentary on these numbers suggests that the strength seen in November was the result of people "stocking up".  A rise in spending ahead of the holiday season is normal and would presumably be smoothed away by the seasonal adjustment process, but some stocking up ahead of anticipated further lockdowns might be part of the picture here. That might explain the reported 5.9 percent rise in food and beverage sales, even though such stores are not included in lockdowns.  It's not as easy to explain the 2.2 percent rise in sales at building and garden supply stores -- there are few areas of Canada where putting down topsoil or re-laying the patio are on anyone's job list from December to March.

Nine of the ten Provinces saw higher retail activity in November. The sole exception was Manitoba, a fact that is significant because that was the first Province to move back to tighter lockdowns as the second wave of the virus accelerated. All Provinces moved to much more restrictive postures during December, so it is no surprise to learn that StatsCan's preliminary estimate for retail sales in that month is for a decline of 2.6 percent. Lockdowns are in place across the country throughout January -- and very likely beyond as we await more vaccines -- so several months of lower retail activity look very likely.  

* It also raises questions about whether people realize that they may be facing an income tax bill on those support payments in just a few months time.