Retail sales growth – including travel – in Canada is continuing to outperform much of the world so far this year, a sign of the ongoing resiliency of Canadian shoppers despite higher inflation and recession predictions, a new report has found.
The Colliers 2023 Retail Outlook said consumers are still spending, even though retail sales have cooled slightly from last year when prices spiked and interest rates began their meteoric ascent.
Canadian retail sales climbed 2.4% in March compared with the same month a year earlier, outperforming most developed markets around the world, the Colliers report noted.
“Consumer spending was surprisingly resilient early in 2023, with a 5.7% annualized increase in the first quarter,” Royal Bank of Canada assistant chief economist Nathan Janzen and economist Carrie Freestone said in a client note on Friday.
Yet much of that boost came from strong spending in January, and more recent monthly readings have been softer, they said, adding, “We continue to expect spending to flag over the second half of this year, even with surprising resilience year-to-date.”
Within Canada, retail sales have been strongest in regions with a lower cost of living, the Colliers report said.
Sales have been highest in provinces that recorded a significant influx of Canadians from other parts of the country during the pandemic, it said.
“The tremendous growth in Alberta and muted performance of Ontario reflects significant interprovincial migration, with a record high level of leavers from Ontario, and a record high level of arrivals in Alberta,” the report said.
Demand for travel, hospitality and entertainment has been a key driver of sales, the Colliers report noted.
“The appetite for experience is still very strong,” said Adam Jacobs, senior national director of research with Colliers Canada. “We were all locked down for years and there’s absolutely still record-high demand for bars, sports, entertainment, travel, hotel rooms and plane tickets.”
Statistics Canada is expected to release its latest retail trade data for April on Wednesday.