Canadian retail sales rise 0.8% in February

April 18, 2019 | Last updated on April 18, 2019
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Statistics Canada says retail sales rose 0.8% in February to $50.6 billion, the first increase since October.

Economists had expected an increase of 0.4%, according to Thomson Reuters Eikon.

Sales were up in five of 11 subsectors, representing 73% of retail trade.

Retail sales at general merchandise stores, which include department stores, warehouse clubs as well as home and auto supplies stores, rose 3.8%, while sales at new car dealers helped motor vehicle and parts dealers sales climb 1.4%.

Sales at building material and garden equipment and supplies dealers were down 1.6% after posting gains in December and January.

However, overall retail sales in volume terms were up only 0.2%—a “mediocre” result, said CIBC chief economist Avery Shenfeld in emailed commentary. While today’s data were better than expected and will help offset weaker manufacturing activity for February GDP, they weren’t “all that strong a signal for consumer activity,” he said.

CIBC expects GDP to be below 1.5% in the first quarter, making for two consecutive quarters where growth has undershot potential—and for a continued pause on rate hikes when the central bank makes its next announcement on April 24.

“The possible opening of an output gap will leave the Bank of Canada communicating a stand-pat outlook for monetary policy next week,” said Royce Mendes, CIBC director and senior economist, in a report.

U.S. retail sales soared 1.6% in March

Meanwhile, U.S. retail sales surged in March at the fastest pace since late 2017, as spending on autos, gasoline, furniture and clothing jumped.

The Commerce Department said Thursday that sales increased a seasonally adjusted 1.6% from February, the strongest increase since September 2017.

The gains mark a sharp rebound from a lacklustre period of sales dating back to December. It’s a sign that the healthy job market has likely made consumers more eager to spend in ways that boost overall economic growth.

“For the first time in months, markets were finally presented with an upbeat report on U.S. retail sales,” said Jennifer Lee, a senior economist with BMO Capital Markets. “Americans hit the malls with a vengeance.”

Sales at gas stations climbed 3.5% in March, while spending at auto dealers jumped 3.1%. Clothiers reported a 2% gain and furniture stores enjoyed a 1.7% bump.

Out of 13 retail categories, only one—sporting goods, hobby, musical instrument and book stores—reported a sales decline.

Spending at department stores was unchanged in March. Purchases in the sector that includes online businesses enjoyed a 1.2% increase. Restaurants saw their sales improve 0.8%.

Excluding autos and gas, retail sales increased by a still solid 0.9%. The ramp up suggests that consumers feel confident enough about their finances to maintain their spending, overcoming fears after retail sales in December plunged 1.6%, partially recovered in January and declined again in February.

During the past year, retail spending has grown 3.6%.

“The fundamentals for consumer spending are solid,” said James Marple, senior economist at TD Bank. “While the pace of gains are unlikely to match the stimulus-fueled pace of the past year, they will put a solid foundation under economic growth that is likely to average around the 2% mark over the remainder of 2019.”