Canada: Retail sales momentum proved resilient in October

Data released on Friday showed that retail sales increased 0.4% in Canada during October. CIBC analysts They note that it appears that the increase in Covid-19 cases had a lesser effect on consumer spending in October than was feared.

Key statements:

Canadian retail sales momentum proved resilient in October, driven in part by surprising strength in new car sales. While the pace of growth appears to have stalled in November based on Statistics Canada’s preliminary estimate, the report does not capture some of the largest online retailers that could have gained market share during the month as Covid cases rose and closures ordered. As a result, the trend in merchandise sales is likely to be even healthier than seen in this launch. “

“The stagnant sales in November is somewhat disappointing, given the strong labor market data for the month. However, these readings on retail sales don’t capture some of the biggest sellers online, who may have been gaining market share as Covid cases spiked and shutdowns were ordered. Therefore, the trend in total merchandise purchases could have been healthier than what is shown in today’s report. “

“It appears that the increase in Covid cases had a lesser effect on consumer spending in October than was feared. It’s hard to know how much that weighed on purchases in November, given that some sales likely migrated to online retailers not included in the report. Therefore, the flat initial estimate for the month likely understates the trend in actual merchandise purchases. This will be important to keep in mind when trying to interpret upcoming retail sales readings, as the surge in Covid cases and additional closures likely pushed spending even further towards online retailers just as the holiday shopping season was in full swing. ” .