Canadian retail sales essentially remained flat in November, falling just 0.1% to $29.5 billion. The slight drop was “right in line with consensus expectations,” according to BMO Nesbitt Burns chief economist Sherry Cooper.

StatsCan figures released today indicated that declines in one half of all retail sectors offset increases in the other half.

In the month before Christmas shopping season, consumers significantly reduced their spending in general merchandise stores (-2.3%) and furniture, home furnishings and electronics stores (-1.9%). The declines were much smaller in stores of the automotive sector (-0.3%) and in clothing and accessories stores (-0.1%).

On the positive side, consumers spent more in building supplies stores (+1.4%), food stores (+1.2%), pharmacies (+0.7%) and stores classified in the miscellaneous category (+0.7%), where the gain was seen mostly from sporting goods, hobby, music and book stores.

Strong retail sales in the previous months — retailers have seen their monthly sales rise 9 times in the first 11 months of 2004, pushing cumulative sales up 4.7% compared with the same 11-month period in 2003 — were cited by analysts as a contributing factor to the comparatively weaker figure.

“Some give-back effect was reflected in consensus expectations that had called for a dip in November,” said RBC Financial Group assistant chief economist Derek Holt. “The fact that retail sales did not retrench further in November is a mildly positive sign.”

Said Cooper: “Despite the lackluster performance in November, the solid start to Q4 still suggests that consumer spending for the entire quarter will rise at around a 3% annual rate, similar to Q3.”

In constant dollars, retail sales fell 0.4% in November, the first drop in six months.

The total money spent by consumers at general merchandise stores in November fell by 2.3%. Within the sector, department stores were particularly hard hit (-3.5%), their largest dip of any month in five years.

Despite the November setback, sales in the general merchandise sector have been quite strong in 2004. Cumulative sales for the first 11 months of 2004 were 5.3% above those in the same period of 2003.

Sales in furniture, home furnishings and electronics stores dropped 1.9% in November, after remaining essentially unchanged in October (+0.1%).

Lower sales at new car dealers (-0.6%) and gasoline stations (-0.4%) contributed to a 0.3% sales decline in the automotive sector in November.

The news was better at building and outdoor home supplies stores in November, where sales up 1.4% after two months of declines. Retailers in this sector have enjoyed double digit annual sales gains in the last three years.

Food and beverage stores posted a healthy gain in November (+1.2%), due mostly to strong sales at supermarkets (+2.3%). Supermarkets have experienced strong sales growth since the spring of 2004.

Beer, wine and liquor stores sustained their second consecutive monthly sales drop in November (-2.8%). Overall sales at beer, wine and liquor stores across the country have been advancing since the spring of 2003.