Retail disappointed in June in B.C. as sales growth lagged behind all provinces while the sector posted the strongest decline in more than two years.
A slowdown in housing-related purchases, health products and gasoline sales contributed to a 1.8% sales decline from May to a seasonally adjusted $7.13 billion. This was led by a 2.1% drop within Metro Vancouver. National sales edged lower by 0.2%.
Year-over-year sales growth in B.C. decelerated from a pace of 4.2% in May to 1.2% in June. In comparison, national growth was 3.8%.
Among store segments, year-over-year sales in home furniture and furnishings fell 1.1% compared with a 6.7% gain in May. Building materials and gardening equipment sales growth slowed from 7.7% to 2.1% and gasoline sales fell from 12.2% to 7.1%. Health-related stores posted a 5.3% decline in sales from a year ago.
Year-to-date sales were still up by a healthy 4%, with a similar gain observed even when stripping out vehicle sales and gasoline. That said, the growth reflects positive sales momentum in 2017. A weakening of the housing cycle is showing up in related retail segments, while motor vehicle sales have eased after a 2017 sales peak, reflecting higher borrowing costs, less replacement demand and decelerated employment growth.
Annual sales are forecast to rise by 4.3% this year, following a 9.5% gain in 2017. Population growth, wage gains, tourism flows and general economic growth will continue to underpin moderate sales growth, although subdued housing activity remains an anchor.
The number of employment insurance (EI) recipients in B.C. fell for a seventh consecutive month in June, reflecting tight labour market conditions. Total recipients edged down by 0.5% from May to 40,970 persons and by 19.6% on a year-over-year basis. The latter was second only to Alberta’s decline.
EI counts are trending at near-record lows in B.C.
While benefits expiration naturally erodes EI counts, the current trend reflects strength in B.C.’s job market and ease of finding employment in the event of turnover. The flow of initial and renewal claims is in decline, aligning with an exceptionally low and country-leading unemployment rate of 5% and surging job vacancies. Employers are generally scrambling to find workers and bidding up wages, curtailing EI usage.
Among B.C. census metropolitan areas (CMAs), monthly EI counts fell in Kelowna (down 1.3%) and Victoria (down 0.5%) but rose in Abbotsford-Mission (up 3.6%). The Vancouver CMA posted little change. Year-over-year declines were deepest in Kelowna (down 24.8%). •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
