Canadian auto sales posted “modest” uptick in August, Scotiabank says
The sales increase ended a record seventeenth month of year-over-year declines in auto sales in Canada, a new report from the bank says.
Canadian auto sales posted a modest uptick in August with a 0.6% year-over-year (y/y) (nsa) headline increase, a new report from Scotiabank said, ending a record seventeenth month of y/y declines in auto sales in Canada.
An early Labour Day weekend artificially boosted sales numbers, Scotiabank said in its most recent Global Auto Report, while double-digit fleet sales masked continued weakness in retail sales. “As dealers gear up for the roll-out of new models later this fall, there was no doubt pressure to offload old inventory,” the bank said in its report.
Solid fundamentals in the Canadian economy are not materially translating into auto sales growth, Scotiabank said. “Job growth once again blew away market expectations for August with another 81 k jobs added, and was particularly concentrated in key auto markets of Ontario and Quebec,” the report noted. “Wage growth in August pulled back slightly to 3.8% y/y after last month’s surge of 4.5% growth, but still remains decent. Meanwhile, housing markets showed continued strength in August with resales rising for a sixth consecutive month while prices picked up modestly.”
Overall, consumer confidence has also been solid, Scotiabank said, although sentiment pulled back slightly in August, according to the Conference Board’s latest survey. Recent headline GDP growth showed a solid rebound in the second quarter, however it masks weaker domestic consumption, including persistently flat retail sales including weak auto sales.
Auto sales across regions and provinces continue to be mixed, with all regions except Western Canada posting y/y gains in August sales, along with a pick-up in the sales rate. Central Canada saw a healthy 4% y/y (nsa) boost to auto sales in August, Scotiabank said, with Ontario sales in particular surging by almost 5% y/y (nsa) after a full year of consecutive monthly declines. “Quebec benefited from a sales lift of about 2% y/y (nsa),” the report said. “Ontario will likely continue to face headwinds as its economy anticipates lower growth for 2019 (1.4% real GDP), while Quebec should continue to post a solid sales year with more robust economic performance around 2.1% GDP expected.”
In Western Canada, meanwhile, the provinces generally suffered a poor sales month with a regional sales decline of about 4% y/y (nsa). “B.C. posted the largest losses of over 4% y/y while Alberta’s retrenchment was a more modest 1% y/y,” Scotiabank said. “Saskatchewan continues to buck the regional trend with another positive sales month of over 2% y/y growth.”
And in Atlantic Canada, auto sales picked up by a solid 4% y/y (nsa) in August with gains across all provinces. Once again Newfoundland and New Brunswick led this growth, Scotiabank said, albeit with totals that were down from last month’s double digit increases in both provinces. “The region was already well into a sales slowdown last year so monthly gains speak more to recovery than strength,” Scotiabank said.