Canada retail sales decline on reduced holiday shopping

Canadian retail sales fell for the time in five months in December on reduced holiday spending at department and electronics shops.

Retail sales decreased 0.2 percent to C$38.6 billion ($38.8 billion), Statistics Canada said today in Ottawa. The decline matched the median estimate in a Bloomberg News survey of 24 economists. Wholesale purchases increased, led by food and autos, another report showed.

Spending power is being eroded by rising unemployment and record consumer debt loads at a time when Bank of Canada Governor Mark Carney is relying on households to contribute more than half of the country’s 2 percent economic growth this year. Consumer confidence fell in February to the lowest level since 2009, according to a Feb. 15 Nanos Research poll.

“Most stores typically associated with holiday shopping registered weaker results in December,” Statistics Canada said.

Department store sales declined 1.5 percent to C$2.20 billion, the fourth straight decrease, and purchases at electronics stores fell 2.8 percent to C$1.13 billion. Sporting goods, hobby, book and music store receipts dropped 3.4 percent to C$963 million, while clothing store sales fell 0.8 percent to C$2.19 billion.

The Canadian dollar slipped 0.2 percent to 99.59 cents per U.S. dollar at 8:35 a.m. in Toronto. One Canadian dollar buys $1.0041.

Record Debt Levels

Household debt will continue to set records after reaching 153 percent of disposable income in the third quarter, the central bank predicted last month. The unemployment rate rose to a nine-month high of 7.6 percent in January, continuing a trend of sluggish job creation that began in the second half of last year.

Retail sales fell in seven of 11 major categories representing 61 percent of the total, Statistics Canada said.

Motor vehicle and parts sales decreased 1 percent to C$8.69 billion, the first decline in five months. Sales excluding autos were little changed at C$29.9 billion, compared with a median forecast of a 0.1 percent increase.

The volume of goods sold, which excludes the effects of price changes and more closely reflects the industry’s contribution to economic growth, was little changed in December, Statistics Canada said.

Gas and Groceries

Gasoline station sales fell 1.1 percent to C$4.83 billion in December. Furniture sales rose 3.2 percent to C$1.28 billion, and food and beverage sales increased 1.2 percent to C$8.87 billion.

The Works Gourmet Burger Bistro said Jan. 30 it will add 50 new locations across Canada, accelerating a plan that began in April.

For all of 2011, retail sales rose 3.6 percent to C$454 billion, reflecting a 17.3 percent jump at gasoline stations and a 4.8 percent rise at automobile and parts dealers.

Statistics Canada also reported today that wholesale sales rose 0.9 percent in December to C$49.6 billion, and on an annual basis by 7.4 percent to C$577 billion.

Economists predicted sales would gain 0.6 percent in December, according to the median of 17 responses to a Bloomberg News survey.

The volume of wholesale sales, which removes the impact of price changes, rose 1.3 percent in December.

Inventories increased 1.4 percent to C$58.5 billion. The inventory-to-sales ratio, a measure of how many months it would take to deplete stocks at the current sales pace, rose to 1.18 in December from 1.17 in November.

The statistics agency revised its estimate of November’s decline in wholesale sales to 0.3 percent from 0.4 percent. November retail sales were revised to a 0.4 percent gain from a previously reported 0.3 percent rise.