Canadian retail sales were essentially flat in September, Statistics Canada said today. In terms of prices, sales edged up for the third consecutive month but only by a meagre 0.1 per cent, below the consensus forecast of a 0.5 per cent increase. In terms of volume, retail activity was flat.
With economic growth hovering around a modest two per cent, household balance sheets deeply in the red and the housing market cooling in many areas of the country, Canadian shoppers’ lack of enthusiasm is hardly surprising.
But there might have been another reason for nearly flat sales in September. As Scotiabank economists Derek Holt and Dov Zigler wrote in a note to clients before StatsCan’s release:
A potential key is whether Canadians spent more in the US such that sales leaked out of the country like they did in the June report. In June, the Federal government raised the 48 hour duty exemptions to $800 and this immediately prompted greater cross border shopping. In September, overnight trips to the US by Canadians rose to an all-time high as they took advantage of the Canadian dollar’s purchasing power, often cheaper US retail prices, and the higher exemptions.
You can also blame the higher duty exemptions—along with the loonie remaining at parity with the U.S. dollar—for accelerating the spread of one of America’s most savage shopping customs north of the border. Eager to divert Canadian wallets away from U.S. competitors, domestic retailers are embracing Black Friday deals, writes the Globe and Mail.
Don’t forget to pack you pepper spray as you line up at the mall tomorrow.