Canada’s retail sales likely to have dropped in April

Canada’s consumer spending growth is likely to have taken a breather in April. According to a TD Economics research report, Canada’s retail sales are expected to have dropped 0.2 percent in April, owing to a deceleration in auto sales. This will counter a sizeable tailwind from gasoline prices. Auto sales are likely to ease from their record month that should permit the ex-autos metric to post a modest 0.4 percent rise. Most of this rise is linked to higher gasoline prices while the weak employment report for April might hurt core retail sales.

There might also be a certain amount of modest impact from the anxiety surrounding the housing market. Building material sales are expected to fall modestly, thanks to the announcement of new regulations for the Toronto market that have led to a slowdown in both residential construction and resales. The effect of rising consumer prices should see retail volumes come in softer than nominal sales, though some giveback is viewed as a healthy development after an annualized rise of 8 percent in the first quarter, added TD Economics.