Retail Sales Story in U.S. and Canada is a Twisty Narrative

Article source: CMDGroup

Obtaining a proper read on retail sales in the U.S. and Canada these days has been made harder  by the sharp drop in gasoline prices, -20.7% year over year south of the border and -13.1% on the north side.

As a result, February’s cash register ‘take’ by gas station operators in the U.S. was -15.6% year over year, while in Canada, in January, it was -7.1%. (Retail sales data from Statistics Canada consistently lags results from the Census Bureau by a month.)

Therefore, U.S. retail sales in February that were +3.1% year over year in total including gas station billings, were a much better +4.8% without them.

Similarly in Canada, an already good jump in total retail sales in January of +6.8% improved to an outstanding +7.3% when sales at the pump were omitted.

Chain store closings (e.g., JCPenney, Sears, Office Depot, Walgreens and Target Canada) that were earlier dominating the headlines have eased somewhat of late, but not entirely disappeared. Sports Authority has been the latest to seek bankruptcy protection while it re-organizes. For starters, the financially-shaken company plans to scale back its 450 outlets by about one-third.

Nevertheless, the bottom line is that overall retail sales in both the U.S. and Canada (Graph 1) have been doing just fine, thank you, and maybe a good deal better than that.

Furthermore, and indeed partly due to the aforementioned consumer ‘break’ on gasoline prices, they’ve been enormously helped by the automotive sector (see accompanying Graphs 2 and 3).

In the U.S., motor vehicles and parts sales are currently +6.8%. In Canada, they are +15.7%.

In America, motor vehicle and parts sales in February were slightly more than one-fifth (21.1%) of total retail sales. In Canada, in January, they were a smidge more than one-quarter (26.3%).

That’s great news for business operators and employees of shipping companies, wholesalers and glitzy walk-in showrooms.

But there is a stage in the supply chain that has not been reaping the whole benefit, domestic producers.

That’s because much of the sales demand has been satisfied by manufacturers located outside each respective country.

In Canada last year, there was a -$13 billion CAD gap between the nation’s total auto and parts exports ($87 billion CAD) and its imports ($100 billion CAD).

The year before, in 2014, there had been an even bigger foreign trade deficit in the sector, as exports of $74 billion were less than imports of $90 billion by -$16 billion.

In America in 2015, motor vehicle and parts exports were $154 billion USD, far below imports of $350 billion USD, yielding a giant shortfall of -$196 billion USD.

Most of the U.S. underperformance was with Mexico (-$71 billion), although Japan (-$49 billion) also accounted for a big chunk of the imbalance.

Graph 1: Total Annual Retail Sales, U.S. and Canada

Data sources: Statistics Canada and U.S. Census Bureau (Department of Commerce).
Chart: CMD.

Graph 2: Motor vehicle sales in the U.S.
(12-month moving totals)

Based on not seasonally adjusted (NSA) numbers.
Data source: U.S. Bureau of Economic Analysis (BEA).
Chart: CMD.

Graph 3: Motor vehicle sales in Canada
(12-month moving totals)

Based on not seasonally adjusted (NSA) numbers.
Data source: Statistics Canada.
Chart: CMD.

Tags: Alex Carrick, Canada, CMD, CMDGroup, job, market, motor, retail, sales, store, US

Category: CMD Group

This entry was posted on Tuesday, March 29th, 2016 at 1:26 pm. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.