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Stuart Weitzman is photographed in his Toronto Eaton Centre store on Aug 19 2011. (Fred Lum/Fred Lum/The Globe and Mail)
Stuart Weitzman is photographed in his Toronto Eaton Centre store on Aug 19 2011. (Fred Lum/Fred Lum/The Globe and Mail)

Retail sales climb on auto, gas station gains Add to ...

Canadian consumers spent far more at retail stores than economists had expected in October, where sales rose 1 per cent across a broad range of goods from food to cars.

Retail sales rose to $38.6-billion, their third straight monthly increase as gains were reported in seven of 11 subsectors representing 76 per cent of retail sales, Statistics Canada reported Wednesday.

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The 1 per cent increase in retail sales was “nearly double the street's call, and matches the hefty pace seen in the prior month,” CIBC World Market economist Emanuella Enenajor wrote in a note to clients.

“Looking at the details, gains were encouragingly broad-based, with increases in the majority of categories, including food, gasoline and autos.”

The Canadian consumer is a key driver of the country's economic growth and evidence of spending supports predictions that the economy is still growing, despite increasing pressure from economic troubles around the globe.

While recent data have suggested that Canadians are continuing to spend, unemployment remains relatively low and the housing market has yet to cool significantly, government officials have warned that ultra-low interest rates meant to stimulate the economy could pose a serious threat.

Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have cautioned repeatedly that interest rates will eventually rise and that consumers racking up debt now could face financial difficulty paying it off down the road.

“Despite a concerning global growth backdrop, Canadians continue to spend,” wrote TD Securities economic strategist Mazen Issa.

“Today's positive print bodes well for the monthly industry level GDP. That said, global headwinds are expected to intensify further and taking this in tandem with labour market weakness and bruised confidence, consumer spending growth will wane into 2012.”

Most of the October retail spending growth should contribute to the economy's growth in the fourth quarter, said Scotia Capital economist Derek Holt.

“That's important, because this Friday's October gross domestic product report was otherwise facing bleak prospects,” Mr. Holt said.

“Net trade and manufacturing shipments were sharply down, housing starts were flat but higher valued-added singles were sharply lower so housing was a drag, wholesale trade was up and now retail trade is up solidly.”

The October increase was led by higher sales at motor vehicle and parts dealers and gasoline stations, Statistics Canada reported.

Sales by volume were also up for a third month in a row, rising 0.6 per cent in October.

The agency said sales at motor vehicle and parts dealers were up two per cent, mainly on the strength of a 2.4 per cent increase in sales by new-car dealers. Gasoline station sales rose 1.8 per cent, mainly due to higher prices at the pump.

Sales at food and beverage stores increased for a fifth straight month, rising 0.6 per cent in October.

Clothing and clothing accessories stores sales went up 1.9 per cent, sporting goods, hobby, book and music stores increased 1.7, while sales at general merchandise store sales were off 0.5.

Sales at furniture and home furnishings stores decreased for a second consecutive month, falling 0.8 per cent.

Retail sales rose in eight provinces in October, with the Western provinces reporting the highest growth.

“Despite a concerning global growth backdrop, Canadians continue to spend. Today's positive print bodes well for the monthly industry level GDP. That said, global headwinds are expected to intensify further and taking this in tandem with labour market weakness and bruised confidence, consumer spending growth will wane into 2012.

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