Canadian Retail Sales Rebound in November, Beating Forecasts


(Bloomberg) -- Canadian retail sales rose the most in eight months in November, helping to allay concerns about the recent weakness in household consumption.

Retailers sold 0.9% more goods in November, largely offsetting October’s 1.1% decline, Statistics Canada said Friday in Ottawa. That beat economist expectations for a 0.6% gain. Higher sales at motor vehicle dealers as well as at food and beverage stores were the main drivers of the increase. In volume terms, which strip out the effects of price changes, November sales edged up 0.7%.

The report is a breath of fresh air after a series of surprisingly soft Canadian economic indicators in the fourth quarter, but it doesn’t change the overall picture of retail sales in 2019. Receipts are up only 1.5% in the first 11 months of the year, the worst performance outside recession since at least 1992.

Canadian Retail Sales Rebound in November, Beating Forecasts

“One month of data doesn’t make a trend, and it is important to note that the headline print was disproportionately driven by a bounce back in auto sales,” Omar Abdelrahman, an economist at Toronto-Dominion Bank, wrote in a note. “We still expect a tepid performance for the Canadian economy in the fourth quarter.”

The loonie briefly appreciated on the report, then fell back, trading little changed at C$1.3139 against its U.S. counterpart at 9:54 a.m. Toronto time. Two-year government bond yields were also little changed at 1.51%.

Key Insights

  • Friday’s report comes two days after the Bank of Canada struck a more dovish tone during its rate decision. The better-than-expected retail print may help temper worries that weak household consumption in Canada will be long-lasting
  • Still, the report wasn’t uniformly strong. Excluding motor vehicles, retail sales increased 0.2%, missing the median forecast for 0.5% gain. In volume terms, the category was little changed
  • Retail e-commerce sales climbed to a record 4.4% of total retail trade, though it’s unclear how much of total online shopping is captured by the data

Get More

  • Retail sales at cannabis stores expanded 5.2% in November
  • Motors vehicles and parts (+3%) and food beverage stores (+0.9) led gains; general merchandise sales (-0.8%) were the main downward contributor
  • October’s print was revised to -1.1% from -1.2%

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