Strong Retail Sales Show Canadian Economy Still Depends On Consumers

Posted by Business in Canada

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As Bank of Canada governor Stephen Poloz said yesterday, the nation’s economic recovery still rests upon the backs of debt-laden consumers.

Statistics Canada’s release of retail sales for November confirmed the governor’s remarks.

Retail sales were up 0.6 percent month-over-month to $41 billion, far better than the 0.2 percent increase economists had expected. Excluding autos, retail sales rose 0.4 percent from October, a tick better than the consensus estimate. 

“Canadian consumers hit the malls and dealer lots in unexpected force,” writes CIBC’s Peter Buchanan. Sales of motor vehicles and parts rose by 1.2 percent month-over-month, the largest sales gain of any subsector. Electronics and appliance stores also saw a marked increase in sales over the course of the month.

TD’s Sonya Gulati notes that this provides key insight into the holiday shopping season. ”November and December represent nearly 20 percent of all annual retail sale transactions,” she writes. “All said, we expect that the season will likely be an average one.”

According to Scotiabank’s Derek Holt and Dov Ziegler, “Annualized tracking of the volume gain in retail sales almost doubled in Q4,” suggesting that this sector and manufacturing will fuel growth in the final quarter of 2013.

However, there is a sense that early winter weather pulled forward some purchases, and storms during December may dampen next month’s results. ”Don’t be surprised if December sales are quite weak with the weather wreaking havoc,” warned BMO’s Benjamin Reitzes.

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