Since early in 2009, "three-month smoothed" retail sales in Canada have become stalled at about -5.0% year over year. In the United States, the comparable figure has been about -10.0% and this has applied over the last five months, from January of this year through May. The good news is that the numbers in both countries are not getting any worse and in some important sub-categories — the auto sector and home reno markets - there are signs of gradual improvement after sharp declines in sales in the second half of 2008.

Auto sector sales are becoming less negative on a year-over-year basis in both countries. Auto sales in Canada in December 2008 were at a 10-year low. They have since risen by around 8% thanks to bargain incentive programs offered by the automakers. Home centre and hardware store sales have also stabilized and are showing slight upward trends in both countries. Tax breaks for home reno projects and "green" energy-saving initiatives are causing homeowners to try to get work done by specified target dates. (story continued below)

Canadian Retail Sales — Three Months Smoothed

Canadian Construction-related Retail Sales — Three Months Smoothed

*"Year over year" is each month versus the same month of the previous year.
Based on latest three-month averages of current dollar adjusted data (and placed in latest month).

Data source: Statistics Canada.
Chart: Reed Construction Data - CanaData.

Regional Pattern of Retail Sales in Canada

The regional pattern of retail sales in Canada corresponds with most other data on the economy, including labour market statistics and housing prices and starts. The Atlantic Provinces are recording either a small year-over-year increase (i.e., Newfoundland at +1.0% and P.E.I. at +0.6%) or a slight decline (N.S. at -2.4% and N.B. at -3.6%). Alberta (-10.5%) and British Columbia (-9.2%) are reporting large drops. Manitoba (-4.0%), Québec (-4.1%), Saskatchewan (-4.6%) and Ontario (-5.8%) are in the middle.

CanaData's Retail Starts Forecasts

CanaData starts statistics indicate that the most recent peak for retail and shopping malls nationwide occurred in 2007 at 18.6 million square feet. In 2008, they fell to 11.9 million and in 2009, based on five months data so far, it is estimated that they will be 6.8 million. The current soft trend in retail is showing up in the labour statistics as well. Statistics Canada reports that trade employment in May 2009 was -1.7% versus May 2008.

This is a category of construction that, given the cyclical nature of the economy, does not stay down for long. Retail starts will begin climbing again in 2010 (8.8 million) and 2011 (11.7 million). Retail spending is a huge part (55%) of the overall economy. In Canada, it is 55% of Gross Domestic Product (GDP) and in the U.S., it is 70%. The percentage is lower in Canada because foreign trade is a bigger component of GDP north of the border.

Canada vs U.S. Retail Sales — Total

*"Year over year" is each month versus the same month of the previous year.
Based on latest three-month averages of current dollar adjusted data (and placed in latest month).

Data sources: Statistics Canada and U.S. Census Bureau (Department of Commerce).
Chart: Reed Construction Data - CanaData.

Canada vs U.S. Retail Sales — New and Used Vehicles and Parts

*"Year over year" is each month versus the same month of the previous year.
Based on latest three-month averages of current dollar adjusted data (and placed in latest month).

Data sources: Statistics Canada and U.S. Census Bureau (Department of Commerce).
Chart: Reed Construction Data - CanaData.