Canada Retail Sales Stalled in October, Likely Flat in November: Reuters
Sign up for Global Macro Playbook: Stay ahead of the curve on global macro trends.
Canada's retail sales grew by a modest 0.6% in October, with a surge in new car purchases offsetting weaker consumer spending in key sectors like groceries and beverages, as reported by Reuters. However, preliminary data for November suggests retail sales likely remained flat, indicating a potential slowdown in consumer spending.
Statistics Canada, the country's statistical agency, released the data on Friday, highlighting a mixed performance across retail subsectors. While sales increased in five out of nine subcategories, the overall growth was muted. The automotive sector, a major driver of retail sales, saw a 2% increase, driven by strong demand for new cars. Conversely, sales of food and beverages, a significant component of retail trade, declined by 0.7%, reflecting weaker supermarket sales.
"Following some signs of strength in retail sales in the previous few months, retail spending looks to have stalled to kick off the fourth quarter," Shelly Kaushik, an economist at BMO Capital Markets, observed in a note to clients, as quoted by Reuters.
Economists suggest the flat November sales figure might be influenced by a two-month sales tax holiday starting mid-December, potentially prompting consumers to delay purchases. They emphasize that this should not be interpreted as an indication of a broader negative trend.
Retail sales are considered a key indicator of broader economic health, contributing significantly to overall consumer spending and, consequently, GDP growth. Canada's economy expanded by a modest 1% in the third quarter, below the Bank of Canada's forecasts, and early indicators suggest a similar underperformance in the fourth quarter.
Excluding automotive sales, which constitute over a quarter of total retail trade, October retail sales saw a minimal increase of just 0.1%.
The Canadian dollar remained relatively stable following the release of the data, trading at C$1.4389 against the US dollar, representing a marginal increase of 0.06%.