Retail sales in Canada unexpectedly declined in January, the third monthly drop in a row, reinforcing concerns about consumers paring back.
Retailers posted a 0.3% drop in January from December, Statistics Canada reported last Friday, versus economist expectations for a 0.4% gain. The drop in December was also revised lower to 0.3%. In volume terms, retail sales were unchanged.
Receipts have fallen for five of the past six, underscoring a broader trend of slowing consumption by households as they face rising borrowing costs, weakening housing markets and volatility in financial markets. It also highlights how Canada’s economy may not be able to rely as much on consumers to fuel new growth.
The drop in January sales was driven by a 1.5% decline in receipts at motor vehicle and parts dealers. Excluding that sector, sales were up 0.1%.
Sales at general merchandise stores fell by 2.4% while receipts at gas stations slipped for the third month in a row, slipping by 0.4% on lower prices.
There was some good news in the numbers. Six of 11 sectors tracked by Statistics Canada reported gains in January.
Building material and garden equipment and supplies dealers posted a 1.4% increase in sales.