Retail sales rose 0.5 percent in December with Statistics Canada estimating a 0.7 percent rise in January. Core retail sales for December, which exclude gasoline stations and motor vehicles, rose 0.4 percent. In volume terms, total sales in December were up 1.3 percent.

Turning back to dollar terms, sales rose in 7 of 11 subsectors led by motor vehicles, up 3.8 percent with sales of new vehicles, up 5.0 percent, posting their largest increase in nearly two years. Sales at general merchandise stores, up 1.7 percent, were also strong as, according to the report, many consumers were seeking retail options for food and beverages. Yet sales at food and beverage stores were nevertheless strong, up 0.5 percent on the month.

On the downside, sales at building materials and garden equipment stores fell 3.8 percent reflecting higher interest rates and what the report describes as deteriorating conditions in the housing market. E-commerce sales were also weak, down 5.7 percent in the month and down 2.4 percent on the year to account for 6.5 percent of total retail trade, down from 7.1 percent in December 2021.

Canada's data are currently running at expectations, very near zero on Econoday's Consensus Divergence Index. When excluding prices, which undershot the consensus in today's CPI report, Canada's score climbs to 13 which indicates slight outperformance.

Retail sales in December are expected to rebound 0.5 percent following a narrower-than-expected decline of 0.1 percent in November.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.