Retail sales bounce back in January, but experts don’t expect the good times to last

OTTAWA – By almost equal measure, Canada’s retail sector has been both good and not-so-good in recent months. Now, it seems shoppers are back inside a good mood.

But for how long?

Consumers rebooted their spending at the start of 2016, making up for the 2.1-per-cent loss in retail purchases in December with a matching rise in buying during January – an optimistic sign that shoppers are helping to get the overall economy on the right track for which could be healthy first-quarter growth.

In fact, the 2.1-per-cent overall rebound in January retail sales marked the single-strongest growth pace since March 2010, when it reached 2.6 per cent – surprising considering that most economists had forecast a gain of just 0.6 percent for the month.

The biggest retail gains in January came in the car sector, where vehicle and parts dealers saw a 4.8-per-cent jump in sales – a turnaround from a 3.1-per-cent decline in December, but still managing increases in three of history 4 months, according to a Statistics Canada report released Friday.

“Traditionally, the winter months are challenging months on which to base predictions for the whole year,” said Michael Hatch, chief economist at the Canadian Automobile Dealers Association.

“They are generally months where sales are not so excellent, simply because people tend to wait out before the spring to make their purchase decisions. However with that said, we’re very encouraged through the results we saw in January and February,” Hatch added.

“They indicate a number of fundamentals that have been driving sales for a number of years. Chief among them is record strong affordability -the average price that people are spending money on new vehicles vis-