Canada retail sales rebounded in December after slowdown
CANADIAN consumers went on a holiday shopping spree at the end of last year, after reining in their spending just a month earlier.
Receipts for retailers jumped 0.8 per cent in December, the biggest increase since April, according to an advance estimate from Statistics Canada released on Friday (Jan 19). That followed a 0.2 per cent decrease in November, which missed the median estimate of a flat reading in a Bloomberg survey. In volume terms, retail sales also edged down 0.2 per cent that month.
Sales declined in four of the nine subsectors in November, while motor vehicle and parts dealers saw the largest increase, up for a third straight month. Excluding autos, retail sales fell 0.5 per cent, versus expectations for a 0.1 per cent decline.
Core retail sales, which exclude gas stations and car dealers, were down 0.6 per cent, led by lower receipts at supermarkets, grocery retailers and liquor stores.
After the release, yields on two-year Canadian government bonds fell about one basis point to 4.076 per cent. The Canadian dollar was little changed at C$1.345 per US dollar as of 8.50 am Ottawa time.
While sales rose sharply in December, the pullback in November still highlights some spending weakness for consumers, who are facing higher interest rates and many of whom are due to renew their mortgages this year.
Friday’s report, combined with accelerating core inflation and worse-than-expected job gains in December, point to the Bank of Canada holding policy rates steady at 5 per cent next week.
“Canadian consumers are increasingly struggling with higher interest rates, as the retail sales data for November showed a drop in spending,” said Katherine Judge, an economist with the Canadian Imperial Bank of Commerce.
“Although the advance estimate for December suggested a 0.8 per cent increase in sales, we expect that strength to be fleeting given the weakening labour market and the impact of higher interest rates on spending.”
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Regionally, sales were down in five provinces in November. Quebec saw the largest provincial decrease of 1.4 per cent and sales in its biggest city, Montreal, decreased 0.9 per cent.
The statistics agency didn’t provide details on the December estimate, which was based on responses from 49.4 per cent of companies surveyed. BLOOMBERG
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