Canadian retail sales were virtually unchanged in December compared with the prior month, ending a year with the smallest increase in retail sales since 2009 when the country was hit by the financial crisis, Statistics Canada said Friday.
The flat reading for the final month of the year followed growth of 1.1% in November. Economists on average had expected an increase of 0.1% for December, according to financial markets data firm Refinitiv.
Retail sales for 2019 totalled $615 billion, up 1.6% from 2018.
“This is particularly disappointing in the context of surging population growth seen across Canada this year,” TD Bank economist Omar Abdelrahman wrote in a brief report.
“In terms of growth implications, we maintain our view that the Canadian economy likely hit a standstill in the fourth quarter of last year.”
Abdelrahman said healthy job and wage gains and a recovering housing market should provide a lift to consumer spending, although the sector also faces rising household debt servicing costs.
“Consumer spending is one area that the Bank of Canada has been watching closely and the persistence of recent soft trends makes a rate cut more likely.”
The Bank of Canada kept its key interest rate target on hold earlier in January, but opened the door to a possible rate cut later this year if the weakness in the economy turns out to be more persistent that expected.
Canadian retail sales in December were up in seven of 11 subsectors, representing 49% of retail trade.
Statistics Canada said sales at building material and garden equipment and supplies dealers rose 3.8% in December, while sales at food and beverage stores gained 0.5%.
Offsetting the gains, sales at motor vehicle and parts dealers fell 1.3% in December, reversing a 2.8% increase in November. Sales at gasoline stations dropped 2.3% in December.
For the full year, retail sales rose in eight of 11 subsectors in 2019.
Sales at motor vehicle and parts dealers were the main contributor to retail sales growth as the sector rose 2.5% in 2019 compared with 0.8% in 2018.
Sales at supermarkets and other grocery stores rose 2.6% in 2019 on higher prices, while sales volumes fell 0.9%. Sales at general merchandise stores rose 3.9% last year.
Statistics Canada said sales at cannabis stores totalled $1.2 billion during the first full calendar year of legal marijuana sales.