Canadian retail sales likely to have dropped sequentially in February, says TD Economics

The Canadian retail sales is likely to have eased in February, following a growth in January. According to a TD Economics research report, total retail sales are expected to have fallen 0.4 percent sequentially, whereas excluding auto it is likely to have dropped 0.5 percent month-on-month. Subdued prices for gasoline might be a considerable headwind for nominal consumer spending, whereas a wider drop in seasonally adjusted consumer prices might result in a moderate outperformance in volumes. In January, retail sales had expanded 2.2 percent sequentially, whereas ex-auto sales had risen 1.7 percent.

In spite of the 3.8 percent rise in motor vehicle sales last month, a pullback is unlikely. Meanwhile, industry reports indicate towards a moderate growth that might lead to a new monthly record. A surge in home sales might stimulate demand for furnishings and furniture. Outside these industries, a more disappointing performance is expected, but might downplay any adverse implications for the Canadian central bank amid increased worries regarding imbalances and a desire to witness a more balanced growth profile, noted TD Economics.

Moreover, the Bank of Canada is not expected to be greatly concerned with a moderate slowdown in February because of the real retail sales strength last month, which might be a mainstay for the quarter, added TD Economics.