B.C. retail spending recoiled in February as sales slumped 3.3 per cent to give up all of January’s gain.
This marked the lowest level since March 2022, signalling weakness in consumer spending despite job gains and strong population growth.
This was the deepest one-month decline since early in the pandemic and followed an uneven range-bound pattern for much of the last 12 months. Nationally, retail sales fell by a more modest 0.2 per cent (and 0.7 per cent after adjusting for higher price levels). Early estimates point to a further sales reduction in March as the pass-through of higher interest rates on spending, and the rotation towards services demand continues to bite on activity.
Regionally, reduced spending was concentrated in Metro 91原创 where sales retraced 4.4 per cent, although sales were down a significant 2.2 per cent elsewhere in B.C.
Unadjusted sales fell 0.8 per cent year over year, compared to a 3.9-per-cent increase in January. The pullback owed to a severe decline at motor vehicle and parts dealers where sales fell 8.7 per cent – driven by a near-12-per-cent decline at new car dealers. This was at odds with the national pattern, where sales were substantially higher and could reflect higher interest rate sensitivity. Gasoline sales slowed from a 13.9 per cent year-over-year pace of growth to 6.5 per cent, in part due to lower prices.
Excluding these two segments, core retail sales rose 0.9 per cent year over year, which was down from 4.1 per cent in January as sales broadly slowed. Housing-related spending fell sharply as the sluggish housing market reduced demand. Sales at building materials and garden stores declined 27 per cent, while furniture retailers saw a 26-per-cent contraction. However, electronic and appliance retailers saw sales rise 19.5 per cent. The pass-through of higher food prices and profits lifted grocery store sales by 14 per cent.
B.C. housing starts bounced higher in March, following two consecutive monthly declines. Starts rose 39.5 per cent to reach 47,994 at a seasonally adjusted, annualized pace. B.C. and New Brunswick were the only two provinces to record gains.
The increase in housing starts was led by a surge in multi-family home starts, which increased by 48.7 per cent to 43,180 in March. Single-detached housing starts continued a downward trajectory as volumes dropped further in March to 4,814, down by 10.2 per cent from the prior month. Monthly multi-family starts are highly erratic, given the impact that large projects can have in any given month.
Among census metropolitan areas (CMAs), housing starts where notably up in 91原创, where starts nearly doubled to reach 36,361. This drove the provincial gain in March. Kamloops’ figure was up 144.8 per cent to 142 units, while in Victoria, starts increased by 6.9 per cent to 3,904 units. Kelowna, Abbotsford-Mission, Chilliwack and Nanaimo all reported declines in monthly housing starts.
Compared to the first quarter of 2022, actual unadjusted B.C. housing starts were 39.2 per cent ahead of where they were a year ago, and concentrated in multi-family home starts, which rose 58.2 per cent year over year. Meanwhile, single-detached units fell 31.5 per cent. This divergence reflects build-out times as multi-family projects are planned years in advance, while single-family housing patterns reflect more current conditions.
Bryan Yu is chief economist at Central 1.
