Statistics Canada says retail sales slipped 0.1% in July to $42.5 billion. Economists had expected a gain of 0.5%, according to Thomson Reuters. The drop follows six consecutive monthly increases.

Statistics Canada says sales declined in five of 11 subsectors, representing 55% of retail trade.

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Sales at general merchandise stores decreased 2.7%, while sales at supermarkets and grocery stores were down 1.1%. Motor vehicle and parts dealers saw sales grow by 1.6%, the third increases in four months.

“Auto strength wasn’t enough to offset weakness elsewhere,” says Nick Exarhos of CIBC World Market Economics. “The weakness was pretty broad based, with a 4% increase in furniture related spending not enough offset weakness in line items like clothing, general merchandise and food related spending.”

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He adds, “Importantly for the GDP reading, retail volumes were flat on the month, suggesting growth isn’t likely to exceed our 3.2% Q3 call. All told a weak release, which should support fixed income and weigh on the loonie.”

Retail sales were down in four provinces in July, with lower sales in Quebec and, to a lesser extent, British Columbia, accounting for most of the decrease.

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