B.C. retailers posted a decent pickup in August sales, but the trend continued to signal soft consumer spending.
Retail spending at bricks-and-mortar stores rose 0.8% from July to a seasonally adjusted $7.19 billion following four months of contraction. Higher food and beverage sales and motor-vehicle-related purchases led the increase.
But year-over-year sales were up a scant 0.4%, with year-to-date activity up 0.6% through the year’s first eight months. Adjusting for retail price inflation of about 1% nationally, and Consumer Price Index inflation averaging above 2%, real sales growth is negative.
That said, underlying details are somewhat better than the disappointing headline figures. Sales drag has predominantly been driven by a 3% drop in motor vehicle and parts sales, which reflects lower replacement demand, debt-constrained households and potentially a shift in preferences toward greener forms of transportation. Sales at building material/gardening stores declined by 5.4%.
Broadly, other store segments have posted modest growth. Excluding motor-vehicle-related stores and gasoline stations, which reflect gas prices, sales in other segments (or core sales) were up nearly 2% year-to-date. While not stellar, growth is driven by population growth and employment gains.
It is also worth noting that retail sales underestimate growth in spending, as they exclude much of the high-growth e-commerce space. According to Statistics Canada, these sales rose 25% year-over-year nationally, albeit representing 3.2% of total retail trade.
Regionally, sales in Metro Vancouver are down 1.1% through August, which has been offset by a gain of 2.2% elsewhere in the province.
Provincial sales will likely end the year marginally in the black with a 0.5% gain, but down from 2% in 2018. This marks the weakest performance since 2009, when a 4% decline was recorded. A 4% gain is forecast for 2020.
The number of employment insurance (EI) recipients in B.C. edged lower in August to 42,300 persons, marking a 0.7% decrease from July. While generally higher in recent months, levels have held a low range-bound trend over the past year and were up 1.5% from same-month 2018.
August beneficiary counts fell in both Vancouver (down 0.7%) and Victoria (down 0.5%) metro areas from July, with gains of 1% in Abbotsford-Mission and 0.4% in Kelowna. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
