Canada's retail sales rise 0.4 per cent to $54.6 billion in October

Retailers made $54.6 billion in sales in October, marking the sixth monthly increase since April's record decline at the start of the COVID-19 pandemic, Statistics Canada said on Friday.

Car and truck part dealers led the 0.4 per cent overall increase, as sales of trucks and buses were up 4.1 per cent from this time last year, the report said. However, Statistics Canada also noted that passenger car sales are down 23.2 per cent from a year ago, and sales at gas stations fell 2.7 per cent in October, declining for the first time in six months.

Core retail sales, excluding gas stations and vehicle parts, were up 0.3 per cent in October amid a nearly 12 per cent sales bump for sporting goods, hobby, books and music stores. Furniture stores also saw sales spike 6.6 per cent in October, and building material and gardening shops saw sales rise 2.9 per cent during the month.

E-commerce sales spiked by more than two-thirds in October compared with this time last year, and now represent more than five per cent of overall retail trade.

But the agency also said that retail sales fell in Ontario during October for the first time since April, amid record increases in COVID-19 cases and stricter public health measures. Sales also fell 4.3 per cent in New Brunswick, where general merchandise stores were dinged during the month.

"Today's release surprised to the upside, with positive growth in October as well as an upward revision to an already-strong showing in September,'' wrote Ksenia Bushmeneva, an economist at TD Economics.

"That being said, this was likely the last bout of good news for some time. With COVID-19 cases remaining high or increasing across much of the country and restrictions intensifying, things will likely get worse before they get better.''

Sales climbed in seven provinces in total, and Statistics Canada noted a 2.1 per cent uptick British Columbia, where health store sales rose in October.

"Just like in other parts of the economy, the pandemic is creating winners and loser as it reshapes the retail landscape. With spending on services out of reach, consumers spent more on goods this year,'' wrote Bushmeneva in a note to clients.

Statistics Canada estimates that retail sales nationwide were relatively flat in November heading into the holiday shopping season, although the agency says that's a preliminary estimate and will be revised. Priscilla Thiagamoorthy, an economist at BMO Capital Markets, wrote that given the 1.1 per cent drop in U.S. retail sales in November, ``an unchanged reading is a major win for the Canadian economy.''

"A surge in virus cases and tighter restrictions in many provinces meant stores had to close their doors heading into the all-important holiday shopping season,'' wrote Thiagamoorthy in a note to clients.

"Given that retailers were discounting early and aggressively, it's possible that some of the relative firmness in sales may have been 'borrowed' from December's results.''