Retail sales growth in Canada continues to outpace that seen in most of the world so far this year, a sign of the continued resilience of Canadian consumers in the face of high inflation and recession forecasts, points out a new report.

According to findings from Colliers’ Retail Outlook for 2023, Canadian consumers continue to spend, even though retail sales are down slightly from a year ago when prices soared and interest rates began their meteoric rise.

Canadian retail sales posted 2.4% growth in March, compared to the same month a year earlier, showing a stronger advance than seen in most developed markets around the world, the Colliers report noted. , a firm specializing in real estate services and investment management.

In comparison, retail sales in the United States rose only 1.6% in March, on an annual basis, while they fell in the United Kingdom, France and Germany, according to the report.

Still, new retail sales figures to be released this week by Statistics Canada may show signs of slowing consumer spending and demand as borrowing costs rise and the labor market tightens. weakens, predict economists.

“Consumer spending has been surprisingly resilient at the start of 2023, growing 5.7% annualized in the first quarter,” Royal Bank of Canada Deputy Chief Economist Nathan Janzen said on Friday. economist Carrie Freestone in a note to clients.

However, much of that increase came from heavy spending in January and more recent monthly readings have been weaker, they pointed out.

“We continue to expect spending to soften in the second half of this year, even with its surprising resilience since the start of the year,” they explained.

In Canada, retail sales have been strongest in regions with lower costs of living, according to the Colliers report.

Sales have been highest in provinces that have seen a large influx of Canadians from other parts of the country during the pandemic, he said.

“Alberta’s tremendous growth and Ontario’s weak performance reflect significant interprovincial migration, with a record level of departures from Ontario and a record level of arrivals to Alberta,” the report said.

“The least affordable regions saw the smallest gains (or declines) in retail sales, while the most affordable regions experienced growth. »

Overall, Canada’s strong population growth relative to other developed countries has continued to act as a tailwind for retail sales in Canada, the report says.

Meanwhile, demand for travel, hospitality services and entertainment has been a key driver of sales, the Colliers report points out.

“The appetite for experimentation is still very strong,” observed Colliers Canada’s Senior National Director of Research, Adam Jacobs.

“We’ve all been locked down for years and there’s still record demand for bars, sports, entertainment, travel, hotel rooms and plane tickets. »

Retail rents have hit all-time highs as renewed rental demand, low availability rates and a lack of new development funneled demand into existing malls, the report said.

Despite the high-profile closure of U.S. retailers such as Bed Bath and Beyond and Nordstrom, vacant space was quickly absorbed in most markets, he continues.

“Retail has nine lives,” Jacobs said. There is a lot of attention on some major store closures in Canada, but if we zoom out and look at general trends nationally, these are positive. »

Statistics Canada is due to release its latest retail trade data for the month of April on Wednesday.

In a report released last week, the Conference Board of Canada said its consumer spending index showed a pullback in spending in the first week of April, but steady growth for the rest of the month.

“Each region’s Consumer Expenditure Index increased from last month’s results,” the report said. Alberta leads the pack with a 4.3 point increase in its monthly average. The smallest increase was seen in Quebec, at 0.5 points. »

The research group added that the overall increase “could indicate that people believe that financial burden influences such as interest rate hikes have peaked, allowing them to engage more in financial burdens.” buying rather than saving”.

Indeed, that resilience was hinted at by the Bank of Canada when it raised its benchmark interest rate to 4.75% earlier this month, Royal Bank economists noted.