Canadian retail sales rebounds marginally in October

Canada’s retail sales rebounded a bit in October. On a sequential basis, retail sales rose 0.3 percent from September’s 0.1 percent gain. This was against consensus expectations of a gain of 0.5 percent. Disappointingly, accounting for price changes reveals a flat volumes print.

The rise was mainly driven by rises in sales at motor vehicles and parts dealers, up an impressive 1.3 percent on the month. Sales at gasoline stations also rose 1.9 percent in nominal and real terms. Excluding those two volatile categories, retail sales dropped 0.4 percent.

This was the first month in which cannabis stores were incorporated in retail trade data. Partially because to this, sales at miscellaneous stores saw a solid 4.5 percent rise. Excluding cannabis, sales in this category rose 1.1 percent.

In line with decelerating housing market data, furniture and home furnishing stores saw falls of 1.5 percent. Building materials and gardening equipment stores also showed of housing market weakness, falling 0.9 percent.

Region wise, retail sales came in mixed, increasingly in just 5 out of 10 provinces. Marked rises were seen in Ontario and Quebec. Sales fell in Alberta for the third straight month. Performance throughout the Atlantic provinces came in mixed.

Today’s report is comparatively disappointing given the flat volumes print. The retail picture continues to be that of moderating consumer spending. Housing market softness continues to reflect in lower sales at home, furniture, and gardening stores.

“Going forward, healthy labour markets and wages will likely be slightly offset by the impact of rising borrowing and debt service costs. This is likely to shift growth slightly away from consumer spending to investment going forward, in line with the Bank of Canada's expectations (and ours)”, added TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at -43.1072, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 8.02246. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex