Headline retail sales held steady at a record $7.29 billion in November following a sharp October gain despite a drag from lower auto sales.
Brisk sales across most other retail segments pointed to high levels of consumer demand due to employment growth in the region that hit 3.7% in 2017, elevated housing market activity and high levels of tourism. The growing importance of Black Friday has also supported sales.
Elevated November activity kept retail spending well ahead of a year ago at a country-leading 11.5%. Same-month growth accelerated for electronics and appliance retailers, which posted a 12% year-over-year gain compared with a negative reading in October. Similarly, growth among clothing and sporting goods retailers moved back into positive territory after recent weakness. B.C.’s year-to-date sales growth was 10%, reflecting strong gains in Metro Vancouver (up 10.6%) and the rest of the province (up 9.4%).
Retail spending growth is forecast to ease to 5.3% in 2018 from nearly 10% in 2017. Declines in economic, employment and population growth are the key drivers, although strengthening wages will provide upside.
B.C.’s strong retail cycle has contributed to higher business confidence. The latest reading of the Canadian Federation of Independent Business’ business barometer index rose to 66.7 points for B.C. in January, up from 64.3 points in December. It was B.C.’s strongest showing since June on the index, in which a value above 50 marks a positive level of optimism among businesses about performance over the next year. B.C. trailed only Quebec among provinces, and a substantial number of B.C. businesses plan to expand hiring.
Meanwhile, non-farm payroll employment data remained steady in November. Employment was unchanged from October, but up 3.4% from same-month 2016 and aligned with solid growth observed in the alternative Labour Force Survey. Average growth over the first 11 months ran at a similar pace of 3.4% with strong hiring in areas related to tourism, housing construction and technology, alongside demographic shifts. Year to date, employment in construction rose 5%, in accommodations and food service by 4.2% and in information and cultural industries by 8.5%.
Average weekly earnings from October rose by 0.3% to $947.89. Growth in same-month average earnings slowed from 3.6% in October to 2.2%. In comparison, national average earnings were $988.29, up 2.8% year-over-year.•
Bryan Yu is deputy chief economist at Central 1 Credit Union.
