WEA Eastern Canada Storm 20131222

Retail sales in December slid 1.8 per cent from November as pre-Christmas ice storms and other bad weather kept Canadians out of stores and car showrooms. (Nathan Denette/Canadian Press)

Retail sales in December slid 1.8 per cent from November as pre-Christmas ice storms and other bad weather kept Canadians out of stores and car showrooms.

The drop was much larger than the 0.4 per cent decline analysts had been expecting.

The weak report helped drive down the Canadian dollar. It closed at 89.82 cents US, down 0.28 cents.

On a seasonally adjusted basis, new car sales slumped 3.6 per cent from the previous month. Sales at furniture and home furnishings stores slumped an even bigger 7.8 per cent.

The holiday sales picture at electronics and appliance stores was even bleaker, as sales there plunged 13.1 per cent. Clothing and sporting goods stores also saw lower sales volumes.

"Most store types typically associated with the holiday shopping period registered weaker sales in December," Statistics Canada said in a release. "Extreme weather conditions throughout the country were a factor."

Every province registered a drop in retail sales, with Ontario reporting the largest drop in dollar terms (down 2.2 per cent).

GDP hit likely

Statistics Canada said nine of the 11 subsectors reported lower sales figures in December. Total retail sales came to a seasonally adjusted $40.2 billion for the month, down almost $800 million from November.

The weak sales figures will likely weigh on economic growth figures, analysts said.

"This adds to an already bleak picture for December GDP that we now think is likely to come in at around -0.5 per cent month over month, as everything we can track for the month was down," noted Scotiabank economist Derek Holt.  

Analysts also point out that the poor December sales figures are more a function of bad weather than a reflection of weakening fundamentals. 

"Annualized GDP growth in the fourth quarter still likely came in above the two per cent mark as weakness in household expenditures and exports was likely offset by solid growth in business investment," says IHS Global Insight economist Jillian Kohut. "Heading into 2014, retailers can anticipate a much stronger (and hopefully warmer) year."