- Consumers drove strong sales gains in September
- Sales continue to push above pre-pandemic levels
- Only a minority of subsectors have not fully recovered
- Strong Q3 growth gives way to a baked in Q4 gain
CDN retail sales, m/m % change, headline/ex-autos, Sept, SA:
Actual: 1.1 / 1.0
Scotia: 0.0 / -0.1
Consensus: 0.2 / 0.0
Prior: 0.5 / 0.5 (revised from 0.4 / 0.5)
October guidance for headline sales: “relatively unchanged”
Retail sales strongly beat all expectations for September. Those expectations had been primarily driven by StatsCan’s own guidance back on October 21st when they said sales were “relatively unchanged.” Instead, sales jumped 1.1% higher in total and 1.0% ex-autos. Guidance is appreciated, but this morning showcases the perils of providing it when it is based upon limited advance data and can be way off base.
Chart 1 shows that sales in dollar and volume terms continue to march well past the pre-pandemic levels. It’s still feasible this represents a temporary burst of pent-up demand from the magnitude of the drop over late winter and early Spring.
Guidance for October is that sales were “relatively unchanged” again whereas we know how that played out in September. This guidance is based upon a partial 50% survey response rate but we don’t know the weighted distribution of the responses.
All of the sales gain during September was fed by higher volumes as prices were flat.
Retail sales volumes increased by 118% in Q3 over Q2 at an annualized rate. This followed a 42% drop in Q2. Based solely upon the Q3 average and September’s hand-off effect, Q4 has about 4% growth in sales volumes baked in before we get any actual Q4 data. See chart 2.
Chart 3 shows that the unevenness of the recovery in the retail sector continues to lessen. Most subsectors are above where their sales volumes sat before the pandemic struck. The main exceptions are gas stations (lower gas prices, less driving) and clothing (ah those all-day wfh pyjamas...).
Charts 4 and 5 show the weighted break down of sales in volume and dollar terms to show how various types of spending contributed to overall sales growth after taking account of their shares in the totals. Autos and parts contributed the most, but multiple categories put in a team effort.
This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.
Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.
Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.
This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.
™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.
Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.
Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.