| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -0.7% | -0.7% to -0.7% | -0.7% | 1.0% |
| Year over Year | 3.4% | 4.9% |
Highlights
As expected, retail sales retreated 0.7 percent in September, partly erasing August's unrevised 1.0 percent rebound, bringing the year-over-year growth rate down to 3.4 percent from 4.7 percent. The monthly decrease, led by the auto sector, was due to weaker activity as volumes contracted 0.8 percent.
Retail sales were up 0.2 percent in the third quarter but decreased 0.3 percent in volume, more relevant to real GDP. The inflation rate slowed to 2.2 percent in October from 2.4 percent in September, including a slowdown in food inflation.
The advance estimate for October points to a flat performance, in line with the central bank's expectation of weak growth in the second half of the year.
Looking ahead, the Bank of Canada expects a subdued GDP growth growth nonetheless - in the second half of this year as capital and labor reallocation, and weak labor markets dampen household spending. The central bank projects consumption growth around 1.5 percent in the third and fourth quarters of this year against the backdrop of a slower population growth that started late last year in response to a tighter immigration policy. Per capita consumption is expected to slow to 1.2 percent in the third and fourth quarters.
The third quarter BOC Canadian Survey of Consumer Expectations showed that consumers' spending intentions remain negative, although less than in the previous survey, while consumers still perceive labor market conditions as negative.
Today's data paint nothing but ongoing weakness in household consumption. The question is more about whether it is material enough to derail the expectation of a central bank status quo. It is likely too early for the BOC to determine whether the economy is materially weaker than it projects. This data alone won't be enough to change the overall picture, especially since the bar to deliver another rate cut has been raised.
In September, sales declined in six of nine subsectors, driven by a 2.9 percent drop in motor vehicles and parts, without which sales were up 0.2 percent from August. By contrast, gasoline and fuel was up 1.9 percent on higher prices, but decreased 1.0 percent in volumes.
Core sales excluding the auto sector and gasoline and fuel were flat on the month, holding up better than the headline number.
Housing-related sales were down on the month as well: Building material and garden equipment and supplies declined 2.0 percent, and furniture, home furnishings, electronics and appliances contracted 0.5 percent, with decreases across the board. General merchandise sales fell 0.5 percent as well.
Regionally, sales decreased in six provinces, led by Ontario.
E-commerce sales decreased 3.5 percent to C$4.1 billion in September, accounting for 5.9 percent of total retail trade, down from 6.1 percent in August.
Retail sales were up 0.2 percent in the third quarter but decreased 0.3 percent in volume, more relevant to real GDP. The inflation rate slowed to 2.2 percent in October from 2.4 percent in September, including a slowdown in food inflation.
The advance estimate for October points to a flat performance, in line with the central bank's expectation of weak growth in the second half of the year.
Looking ahead, the Bank of Canada expects a subdued GDP growth growth nonetheless - in the second half of this year as capital and labor reallocation, and weak labor markets dampen household spending. The central bank projects consumption growth around 1.5 percent in the third and fourth quarters of this year against the backdrop of a slower population growth that started late last year in response to a tighter immigration policy. Per capita consumption is expected to slow to 1.2 percent in the third and fourth quarters.
The third quarter BOC Canadian Survey of Consumer Expectations showed that consumers' spending intentions remain negative, although less than in the previous survey, while consumers still perceive labor market conditions as negative.
Today's data paint nothing but ongoing weakness in household consumption. The question is more about whether it is material enough to derail the expectation of a central bank status quo. It is likely too early for the BOC to determine whether the economy is materially weaker than it projects. This data alone won't be enough to change the overall picture, especially since the bar to deliver another rate cut has been raised.
In September, sales declined in six of nine subsectors, driven by a 2.9 percent drop in motor vehicles and parts, without which sales were up 0.2 percent from August. By contrast, gasoline and fuel was up 1.9 percent on higher prices, but decreased 1.0 percent in volumes.
Core sales excluding the auto sector and gasoline and fuel were flat on the month, holding up better than the headline number.
Housing-related sales were down on the month as well: Building material and garden equipment and supplies declined 2.0 percent, and furniture, home furnishings, electronics and appliances contracted 0.5 percent, with decreases across the board. General merchandise sales fell 0.5 percent as well.
Regionally, sales decreased in six provinces, led by Ontario.
E-commerce sales decreased 3.5 percent to C$4.1 billion in September, accounting for 5.9 percent of total retail trade, down from 6.1 percent in August.
Market Consensus Before Announcement
Sales seen down 0.7 percent on the month in September, in line with the Stats Canada preliminary estimate, after rising 1.0 percent in August.
Definition
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.
Description
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.
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.
