Retail sales rise 3rd straight month

Canadian retailers enjoyed the benefits of the country'sreviving economy as retail sales grew by 0.5 per cent in February.

Statistics Canada said Friday the gain markedthe third consecutive month in which consumers increased their spendingin Canadian stores.

Across the country, retailers sold slightly more than $36 billion worth of products domestically, up 2.2 per cent fromNovember, the last month in which spending fell.

Analysts have been expecting sales growth as the Canadian economy has been expandingfaster than previouslyforecast, buttheywere disappointed withFebruary's retail expansion.

"Expectations had been for a much stronger one per centrise in February," said Paul Ferley, assistant chief economist with RBC Economics.

An improved auto sector was thebig reason forFebruary's retail rise, Statistics Canada said.

"Higher sales at new-car dealers were the main contributor to the gain," the agency saidin arelease.

Vehiclesales have strengthenedin recentmonths after the Canadian and U.S. auto sectors suffered through an industrywide restructuring in 2009.

Sales of new carshitalmost $6.2 billion inFebruary. That represented a gain of 14 per cent compared withApril 2009when sales fell toalow of $5.4 billion.

Other sectors improve

Canada'sfurniture sellersalso experienced a solid monthin February as sales expanded 8.9 per cent froma year earlier.

Clothing sales were up 7.3 per cent versus a year earlier, while alcohol purchases increased 6.2 per cent.

On the negative side, sales of building materials and garden equipment fell by 7.6 per cent in February versus January, as the federal home renovation tax credit expired.

Volume gains

Once price increases were factored intoFebruary's overall retail figures, sales were up0.6 per cent in volume terms.

Volume increases show that retailers are not merely relying upon price hikes to boost revenue but areselling more products, economists say.

Provincial gains

A number of regions across Canada posted decent sales increases in Februaryversus the same month one year earlier.

New Brunswick, for example, was up 10.6 percent comparing the two months, while Manitoba posted an eight per cent gain February-over-February.

Ontario was the laggard among Canada'sprovinces, up only 4.4 per cent in Februaryversus the secondmonth of 2009.

Finally, British Columbia was up 9.1 per cent February-over-Februarybut barely moved the meter compared with January, gaining only 0.1 per cent.

The country's most western province posted that measly retail gain despite the fact the Olympic Games were held in Vancouver in February.

"BC's February retail sales increase of 0.1% was below expectations. While we do not have the details, it appears that the drop in February new vehicle sales (one per centfewer vehicle units than in January and 12 per centlower dollar volume) contributed to the weak B.C. retail sales Feb. figure," said Helmut Pastrick, chief economist with Credit Union Central of Canada.

A betterbarometer of the Olympic's effect on the province's economy could be next week's release byStatistics Canada offood service and drinking establishment sales figures for February, he said.