Canadian retail sales continue to rise in April, likely to hold up well in months ahead

Canadian retail sales continued to grow strongly in April. The first quarter’s momentum was carried into April. Retail sales rose 0.8 percent sequentially, coming in above consensus expectations of a rise of 0.2 percent and a rise from prior month’s 0.5 percent print. In terms of volume, sales rose healthily by 0.3 percent.

The gains seen in April were pretty broad based, led by building material and garden equipment, clothing and accessories, electronics and appliances and general merchandise stores. On the other hand, sales at motor vehicle and parts dealers and furniture and home furnishing stores dropped.

Region wise, retail sales rose in seven provinces in the month, with Ontario and Quebec accounting for the bulk of the rise. Saskatchewan, Newfoundland and Labrador and Nova Scotia gave some offset.

The healthy gain seen in April, along with the strong performance in March, gives a strong handoff for retail sales in the second quarter. While a repeat of the remarkable growth witnessed in the first quarter is not likely, retail sales are expected to still hold up comparatively well in the months ahead, noted TD Economics in a research report.

Wealth effects from past home price gains in major regions, especially Ontario and British Columbia, along with a broad based rise in economic momentum in other regions should underpin the overall household spending in the near term. But the recent slowdown in Ontario’s housing market and rising interest rates later in 2017 might take some steam out of consumer spending towards the end of this year and the next.

The evolution of economic data so far in 2017 has urged a more hawkish tone from the Bank of Canada. Barring a considerable reversal in momentum of constant weak inflation, the Bank of Canada is expected to raise rates in October 2017, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 47.1933, while the FxWirePro's Hourly Strength Index  for Canadian Dollar was neutral at -6.70358. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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