Retail sales rise 3rd straight month

Canadian retailers enjoyed the benefits of the country's reviving economy as retail sales grew by 0.5 per cent in February.

Statistics Canada said Friday the gain marked the third consecutive month in which consumers increased their spending in Canadian stores.

Across the country, retailers sold slightly more than $36 billion worth of products domestically, up 2.2 per cent from November, the last month in which spending fell.

Analysts have been expecting sales growth as the Canadian economy has been expanding faster than previously forecast, but they were disappointed with February's retail expansion.

"Expectations had been for a much stronger one per cent rise in February," said Paul Ferley, assistant chief economist with RBC Economics.

An improved auto sector was the big reason for February's retail rise, Statistics Canada said.

"Higher sales at new-car dealers were the main contributor to the gain," the agency said in a release.

Vehicle sales have strengthened in recent months after the Canadian and U.S. auto sectors suffered through an industrywide restructuring in 2009.

Sales of new cars hit almost $6.2 billion in February. That represented a gain of 14 per cent compared with April 2009 when sales fell to a low of $5.4 billion.  

Other sectors improve

Canada's furniture sellers also experienced a solid month in February as sales expanded 8.9 per cent from a year earlier.

Clothing sales were up 7.3 per cent versus a year earlier, while alcohol purchases increased 6.2 per cent.

On the negative side, sales of building materials and garden equipment fell by 7.6 per cent in February versus January, as the federal home renovation tax credit expired.

Volume gains

Once price increases were factored into February's overall retail figures, sales were up 0.6 per cent in volume terms.

Volume increases show that retailers are not merely relying upon price hikes to boost revenue but are selling more products, economists say.

Provincial gains

A number of regions across Canada posted decent sales increases in February versus the same month one year earlier.

New Brunswick, for example, was up 10.6 per cent comparing the two months, while Manitoba posted an eight per cent gain February-over-February.

Ontario was the laggard among Canada's provinces, up only 4.4 per cent in February versus the second month of 2009.

Finally, British Columbia was up 9.1 per cent February-over-February but barely moved the meter compared with January, gaining only 0.1 per cent.

The country's most western province posted that measly retail gain despite the fact the Olympic Games were held in Vancouver in February.

"BC's February retail sales increase of 0.1% was below expectations. While we do not have the details, it appears that the drop in February new vehicle sales (one per cent fewer vehicle units than in January and 12 per cent lower dollar volume) contributed to the weak B.C. retail sales Feb. figure," said Helmut Pastrick, chief economist with Credit Union Central of Canada.

A better barometer of the Olympic's effect on the province's economy could be next week's release by Statistics Canada of food service and drinking establishment sales figures for February, he said.