Retail sales growth in Canada continues to surpass global markets this year, highlighting the resilience of Canadian shoppers despite inflation and recession concerns, according to a new report.
The Colliers 2023 Retail Outlook reveals that consumers in Canada are still spending, although retail sales have slightly cooled compared to last year’s spike in prices and increase in interest rates.
In March, Canadian retail sales rose 2.4% year-on-year, outperforming most developed markets globally.
In contrast, retail sales in the US only grew by 1.6%, with declines observed in the UK, France, and Germany.
However, economists predict that new retail sales data from Statistics Canada, to be released this week, may indicate a slowdown in consumer spending and demand due to rising borrowing costs and a weakening labor market.
Royal Bank of Canada assistant chief economist Nathan Janzen and economist Carrie Freestone stated in a client note that consumer spending in the first quarter of 2023 increased by 5.7% on an annualized basis, although more recent monthly readings have been weaker.
Janzen and Freestone expect spending to decline in the second half of the year, despite the surprising resilience so far.
According to the Colliers report, retail sales have been strongest in regions with a lower cost of living in Canada.
Provinces that experienced a significant influx of Canadians from other parts of the country during the pandemic have witnessed the highest sales growth.
The report highlights the significant interprovincial migration, with a record number of people leaving Ontario and arriving in Alberta, as a reason for the tremendous growth in Alberta and muted performance in Ontario.
The most affordable regions have seen the highest retail sales growth, while the least affordable regions have seen smaller gains or losses.
Population growth in Canada, compared to other developed countries, continues to support retail sales growth, according to the report.
The demand for travel, hospitality, and entertainment has been a major driver of sales.
“The appetite for experience is still very strong,” said Adam Jacobs, senior national director of research with Colliers Canada. “There is still record-high demand for bars, sports, entertainment, travel, hotel rooms, and plane tickets.”
