VANCOUVER, BC, Oct 26, 2013/ Troy Media/ – B.C.’s retail economy posted broad-based growth in August, suggesting the embattled sector may be in the early stages of recovery following a difficult two-year period. Total retail sales expanded by 0.6 per cent from July to a seasonally-adjusted $5.25 billion, marking a third increase in four months.
Provincial gains handily outpaced the national gain of 0.2 per cent, while the year-over-year of gain of 2.8 per cent was slightly stronger than the national pace of 2.7 per cent.
While it is advisable not to read too much into a particular data point, especially given the influence of swing factors such as automobile sales and gasoline prices which tend to bounce around, there is reason for cautious optimism. The sales trend has remained positive in recent months and August’s gain was spread across multiple retail sectors.
Monthly sales growth was particularly strong in sectors geared towards housing, including furniture and home furnishings, electronic, and building materials, while general merchandise stores also posted significant gains. These increases offset a slight deceleration in auto-related activity. Factoring recent rebounds in home sales in many regions of the province suggests a housing-led rebound in retail activity could persist.
An uptrend in sales is certainly good news for brick and mortar retailers in the province but consumer demand has a ways to go before the fog over the sector lifts. Year-to-date growth in sales in through August remained low at one per cent, and well below the national performance over the same period of 2.2 per cent.
In Metro Vancouver, sales were unchanged from the same period in 2012. Meanwhile, mild population growth and retail inflation gains suggests real per capita spending is negative and the weak retail environment will persist. Consumer demand remains sluggish due to weak employment growth and high debt loads.
Additionally, retailers continue to feel the pinch of cross-border and online shopping, while further competition is on the horizon from the ongoing expansion of U.S. retailers such as Target and entry of upscale stores including Nordstrom’s.
Current-dollar sales growth for 2013 is forecast to remain at about 1 per cent. This will mark the slowest gain since 2009 and follows a 1.9 per cent increase in 2012. Growth is forecast to reach about 3.5 per cent in 2014, on labour market improvements and higher inflation.
| Central 1 Credit Union
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