British Columbia retail sales slipped in July to underperform the national picture as spending rotated towards services and pandemic demand for durable goods eased.
Sales fell 1.2% to a seasonally adjusted $8.21 billion, marking the first contraction since December and the lowest level since March. This compared with a 0.6% national decline. That said, B.C. has generally been robust, reflecting a lighter touch on physical restrictions for the sector. Retail spending was nearly 12% higher than in February 2020. Year-over-year growth came in at 8.4%, albeit lower than June’s 12.8% gain.
July’s retail pullback was led by slower sales in furniture and furnishing stores, where there was a 3% drop in monthly sales, while year-over-year growth slowed to 3.7% from 14% in June. Building materials and gardening sales continued to decelerate sharply but remained 9% higher than a year ago, pointing to strong but slower housing activity. Clothing sales backtracked following a strong June increase, while sporting goods sales also declined. In contrast, electronics and appliances sales rose.
Regionally, Metro Vancouver sales lagged behind the provincial performance with a 2.7% decline from June as vehicle sales dragged, although year-over-year growth was higher at near 15%.
Growth through the first seven months remained robust at 19%, reflecting the strong rebound and base-year effects of early 2020 declines. This is likely to narrow as consumer spending continues to rotate towards services, while demand for durable goods is expected to ease after strong gains during the pandemic, which should curtail growth. Indeed, restaurants continue to recover amid relaxation of health restrictions, and vaccine passports will allow this to continue despite the pandemic’s fourth wave. Sales at food services establishments jumped 8% from June and narrowed the gap from February 2020 to about 1.5%.
International travel to B.C. increased sharply in July but remained decimated by pandemic factors of restricted borders and public health fears. The number of travellers entering B.C. increased 17% during the month to a seasonally adjusted 28,329 persons, which marked the highest level since April, doubled year over year. That said, the number of travellers remained minuscule when compared with levels in 2019. •
Bryan Yu is chief economist at Central 1 Credit Union.
