December retail sales slide, ending three-month run of rises

Canadian retail sales fell in December, ending a run of three straight months of increases, Statistics Canada reported Thursday.

For the month, sales were down by 0.8 per cent from Novemberto $49.6 billion.

The report was a bit weaker than what the market had been expecting. Economists wereprojecting a drop of 0.5 per cent.

Statistics Canada said December sales at general merchandise stores were down5.3 per cent followingincreases in October and November, while sales at health and personal care stores dropped 3.8 per cent, mainly due to weaker sales in Ontario.

Sales at electronics and appliance stores slipped 9.1 per cent in December following a12.7 per cent jumpin Novemberon new product releases and stronger promotional activity forBlack Friday.

Auto sector

On the positive side, sales at motor vehicleand parts dealers rose 2.1 per cent increase in December, following a3.4 per centdecrease in November.

Higher sales at new car dealers up 2.9 per cent more than offset a decline of 1.3 per cent in sales at used car dealers.

Factoring out motor vehicle and parts dealers, retail sales decreased by 1.8 per cent in December following increases in October and November.

"It seems that Canadians were once again stingy this past holiday season, as December retail sales volumes fell for a third straight year," TD senior economistBrian DePratto wrote in a commentary.

"What the rising importance of BlackFridaygiveth to sales in November, it taketh away from December,"Doug Porter, chief economist at BMO Capital Markets, said in a note. "Still, the pullback was a bit heftier than expected, and was despite a better than anticipated showing by autos."

Porter said the soft retail report will likely keepoverall economic growthflat in December

"Looking ahead, we don't believe the December retail drop is a sign that consumers are about to head into retreat, but we do believe that spending growth will be much milder in 2018 than its blistering pace for all of last year," he said.

Best growth indecades

Despite the weaker report for December, retail sales as a whole in 2017grew6.7 per cent, the highest annual growth rate since1997, reaching $588billion.

Statistics Canada said the increase was partially due to higher prices, as sales in volume terms were up5.4 per cent.

Sales were up in every province, with Ontario leading the way with a gain of 6.4 per cent.