Grappling with high debt levels, consumers have eased up on spending, according to the latest retail sales figures released on Wednesday.
Retail sales declined 0.3 per cent in August to $42.4 billion, Statistics Canada said, the second month in a row shopping activity has dipped.
MORE: Bloated debt loads, high home prices pose risks to economies
Experts were calling for retail trade to either remain flat or pick up a touch in August following July’s decline. The reading was the first back-to-back loss since spring 2012.
“We weren’t expecting too much from Canadian retail sales in August, but even against pessimistic forecasts the data provided some disappointments,” Nick Exharos, economist at CIBC World Markets, said.
Gas declines
Prices at the pump played a major role in the monthly decline, as the amount consumers spent on gas fell 2.1 per cent versus July — a reflection of falling oil and gas prices through the summer which has accelerated this fall.
MORE: Bank of Canada to issue report on falling oil prices
Yet with consumers dealing with near-record amounts of personal debt, shopping may be taking a back seat at last as well, notably for big-ticket items like furniture.
The reading was uneven in terms of where consumers dialed back in August. Exharos noted declines in some home-related purchases with furniture and building materials both down by 1.8 per cent.
Stripping out the effects of lower prices – particularly for gas which trended down in the month – retail volumes declined 0.1 per cent versus July.
- Roll Up To Win? Tim Hortons says $55K boat win email was ‘human error’
- Bird flu risk to humans an ‘enormous concern,’ WHO says. Here’s what to know
- Halifax homeless encampment hits double capacity, officials mull next step
- Ontario premier calls cost of gas ‘absolutely disgusting,’ raises price-gouging concerns
Back-to-school spending
Still, retailers associated with back-to-school spending posted gains as a group. General merchandisers, such as Walmart, Canadian Tire and Target, saw sales collectively climb 1.8 per cent, while clothing retailers and electronics stores saw sales pick up by 1.1 per cent respectively.
The released of the iPhone 6 last month should provide another pop for electronics sales in September, experts at BMO said
Still, alongside the pullback in building materials and furniture sales, food retailers, health and personal care products and sporting goods stores are all seeing a contraction in spending activity.
The two-month decline comes after an unexpectedly strong showing by consumers through most of the year, with experts calling for more subdued spending at the outset of 2014.
“Bottom line: Canadian consumers are taking a bit of a breather after going on a shopping spree,” BMO economist Benjamin Reitzes said.
Comments