Retail sales increased in October, but economist warns Omicron withdrawal is likely on the horizon

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OTTAWA – Canadian retail sales rose 1.6 percent to $ 57.6 billion in October, as new car sales rebounded after two consecutive months of decline.

Statistics Canada said on Friday that the effect of the semiconductor chip shortage on motor vehicle supply was less pronounced in October than in previous months.

Sales at motor vehicle and parts dealers rose 2.2%, driven by a 2.8% jump in new car sales, the agency said.

Statistics Canada also said its preliminary estimate for November showed a 1.2 percent increase in retail sales for the month, but warned the figure would be revised.

“Canadian commerce was picking up speed in October and November, before Omicron likely applied the brakes in December, said Andrew Grantham, senior economist at CIBC Capital Markets, in a client note.

The 1.6 percent increase in retail sales in October exceeded estimates by 1 percent, he noted, adding that Statistics Canada’s first estimates for November suggest that both retail and wholesale sales posted other impressive gains over the past month.

“If it weren’t for the rise of Omicron and the tightening of some restrictions across the country, we would likely be forced to further improve our GDP forecast for the fourth quarter,” Grantham said in the CIBC Economic Flash. “As it stands, something around 4.5% may still be appropriate taking into account a modest decline in December.”

Meanwhile, overall core retail sales – which exclude gas stations and motor vehicle and parts dealers – rose 1.5%, the agency said.

Sales increased in seven of 11 subsectors in October, accounting for almost 60% of retail trade.

One of the largest increases was in sporting, hobby, book and music stores, which saw sales jump 17.5%.

Statistics Canada noted that the increase in sales coincided with the continued resumption of many recreational and school sports leagues in the fall.

General merchandise store sales increased 2.8% for the fifth consecutive month.

Building material and garden equipment and supplies dealers reported a 3.2% increase in sales.

Meanwhile, sales at food and beverage stores edged down 0.6%, mainly on weaker sales at supermarkets and other grocery stores.

Across Canada, retail sales increased in nine provinces in October, led by Ontario and Alberta. Quebec posted the only provincial decline, with sales down 0.2% in October.

In terms of volume, retail sales rose 0.9% in October.

This report by The Canadian Press was first published on December 21, 2021.