OTTAWA — A weak holiday shopping season took a bite out of retail sales, which were softer than expected in December.
Statistics Canada said Wednesday that retail sales fell 0.5 per cent in December as shops typically associated with the holiday season saw sales fall.
Economists had expected no change in December compared with November, according to Thomson Reuters.
People shop at Toronto's Eaton Centre on the day before Christmas Eve, Toronto Ont., Dec. 23, 2016. (Photo: The Canadian Press/Rachel Verbin)
December's decline followed four consecutive monthly increases in Canadian retail sales.
Benjamin Reitzes, senior economist at BMO Capital Markets, said part of the drop can be attributed to Canadians starting their holiday shopping earlier in the year.
"Black Friday is definitely a cause,'' he said referring to the Friday after the U.S. Thanksgiving holiday in November when retailers have some of their biggest promotions of the year.
Reitzes also noted that gift cards have grown in popularity "and those don't show up until you actually use the gift card.''
Black Friday sales are eating into holiday shopping season, BMO's Benjamin Reitzes says. (Photo: Rick Madonik/Toronto Star via Getty Images)
The Statistics Canada report followed a move by Hudson's Bay Co. earlier this year to revise its 2016 financial year outlook downward, saying its sales during the holiday period did not improve enough.
Sales were lower in nine of the 11 subsectors tracked as sales at motor vehicle and parts dealers fell 0.9 per cent.
Excluding motor vehicle and parts dealers and gasoline stations, retail sales fell 1.4 per cent in December.
Statistics Canada said clothing and clothing accessories stores fell 3.7 per cent, while general merchandise stores dropped 1.3 per cent. Electronics and appliance stores fell 2.3 per cent.
Overall, retail sales in volume terms dropped 1.0 per cent.
However, Reitzes was still positive for overall growth in the economy despite the lower than expected retail sales.
"This likely isn't part of a bigger negative trend that's starting,'' he said.
"If we get more bad data then we'll re-evaluate, but for not this kind of one negative data point, following a string of good numbers.''