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Retail sales up in September: Statistics Canada

September sales beat expectations, but economists believe there's a rough road ahead

Retail sales climbed more than expected in September to mark the fifth consecutive monthly increase since the record drop in April due to the pandemic, but economists warned that rising COVID-19 cases and looming restrictions could mean weakness ahead.

Statistics Canada said Friday that retail sales rose 1.1% to $53.9 billion in September, topping the 0.2% increase that economists on average had been expecting, according to financial data firm Refinitiv

"Today's release was a nice surprise, but with COVID-19 situation deteriorating rapidly across much of the country since September, further good news will likely be on hold for now," TD Bank economist Ksenia Bushmeneva wrote in a report.

"Tighter new restrictions in Manitoba and potentially a second lockdown in some of the hard-hit areas in Ontario does not bode well for in-store spending heading into a busy holiday season."

Government officials have warned that the spread of COVID-19 is accelerating and urged Canadians to reduce their personal contacts in an effort to help slow the pandemic.

Statistics Canada said its early estimate for October suggests retail sales for the month were relatively unchanged, but noted it was a preliminary figure and would be revised.

"Given the increasing COVID-driven regional restrictions in recent weeks, November and December could see some weakness," wrote Benjamin Reitzes, director, Canadian rates and macro strategist at the Bank of Montreal.

Statistics Canada said retail sales were up in nine of the 11 subsectors in September with core retail sales--which excludes gasoline stations and motor vehicle and parts dealers--rose 1.1%.

Sales at general merchandise stores climbed 1.8%, while sales at food and beverage stores rose 0.9%, partially due to higher prices for meat, fish and dairy products. Retail sales at furniture and home furnishings stores added 4.5%.

Sales at motor vehicle and parts dealers rose 1.5% in September, while sales at gasoline stations increased 0.2%.

In volume terms, retail sales were up 1.1% in September.

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