December retail sales slide, ending three-month run of rises

A run of three straight months of increases in retail activity ended in December as sales were off by 0.8 per cent for the month, Statistics Canada says.

Retail report was a bit weaker than what the market had been expecting

Sales of electronics were down in December as overall retail activity in Canada slipped by 0.8 per cent, Statistics Canada says. (Justin Tang/Canadian Press)

Canadian retail sales fell in December, ending a run of three straight months of increases, Statistics Canada reported Thursday.

For the month, sales were down by 0.8 per cent from November to $49.6 billion. 

The report was a bit weaker than what the market had been expecting. Economists were projecting a drop of 0.5 per cent.

Statistics Canada said December sales at general merchandise stores were down 5.3 per cent following increases in October and November, while sales at health and personal care stores dropped 3.8 per cent, mainly due to weaker sales in Ontario.

Sales at electronics and appliance stores slipped 9.1 per cent in December following a 12.7 per cent jump in November on new product releases and stronger promotional activity for Black Friday.

Auto sector

On the positive side, sales at motor vehicle and parts dealers rose 2.1 per cent increase in December, following a 3.4 per cent decrease in November.

Higher sales at new car dealers — up 2.9 per cent — more than offset a decline of 1.3 per cent in sales at used car dealers.

Factoring out motor vehicle and parts dealers, retail sales decreased by 1.8 per cent in December following increases in October and November.

"It seems that Canadians were once again stingy this past holiday season, as December retail sales volumes fell for a third straight year," TD senior economist Brian DePratto wrote in a commentary.

"What the rising importance of Black Friday giveth to sales in November, it taketh away from December," Doug Porter, chief economist at BMO Capital Markets, said in a note. "Still, the pullback was a bit heftier than expected, and was despite a better than anticipated showing by autos."

Porter said the soft retail report will likely keep overall economic growth flat in December

"Looking ahead, we don't believe the December retail drop is a sign that consumers are about to head into retreat, but we do believe that spending growth will be much milder in 2018 than its blistering pace for all of last year," he said.

Best growth in decades

Despite the weaker report for December, retail sales as a whole in 2017 grew 6.7 per cent, the highest annual growth rate since 1997, reaching $588 billion.

Statistics Canada said the increase was partially due to higher prices, as sales in volume terms were up 5.4 per cent.

Sales were up in every province, with Ontario leading the way with a gain of 6.4 per cent.