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Canadian Retail Sales Unexpectedly Decline, but Consumer Spending Remains Strong

H.S. Borji
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Canadian Retail Sales Unexpectedly Decline, but Consumer Spending Remains Strong

Canadian retail sales unexpectedly declined in March, but remained close to February’s record high of CAD $41.11 billion, a sign the consumer segment will continued to drive economic growth at the end of the first quarter.

Retail sales declined 0.1 percent to CAD $41.07 billion in March, following a downwardly revised gain of 0.7 percent the prior month, Statistics Canada reported today in Ottawa. A broad consensus of market analysts expected retail sales to have risen 0.3 percent in March.

Year-on-year, retail sales climbed 3.9 percent.

Excluding automobiles, retail revenues increased 0.1 percent versus expectations of a 0.4 percent hike.

Sales declined in seven of 11 retail sub-sectors, which account for 59 percent of all retail trade. Sales volume decreased 0.2 percent, official data showed.

In dollar terms, motor vehicle & parts dealers reported the biggest decline, as sales in this sub-sector fell 0.7 percent. Sales declined 0.6 percent at new car dealers and 3.7 percent at other motor vehicle dealers. Receipts rose 3.1 percent at used car dealers.

Following a gain of 1.2 percent in February, general merchandise stores saw sales decline 0.3 percent.

Gasoline stations witnessed an increase in sales for the fifth consecutive month, as receipts increased 0.8 percent. Sales at food & beverage stores advanced 0.4 percent, led by supermarkets and other grocery stores. Sales at electronic & appliance stores advanced for the third consecutive month at a rate of 1.7 percent, official data showed.

Sales declined in five provinces, led by Ontario and Quebec. Retail sales declined 0.6 percent in Ontario following two months of gains. In Quebec, retail revenues declined for the third time in the last four months at a rate of 0.8 percent. Declines in these two provinces offset gains in Alberta (1.1 percent) and British Columbia (1.1 percent).

The March figures suggest consumer spending, while moderating from the prior month, remained strong at the end of the first quarter. Consumer spending has been a key driver of economic growth in Canada. Along with housing, consumer spending has helped keep the economy elevated during the recession, as policymakers look to businesses to accelerate the recovery.

The Canadian dollar was relatively unchanged following the release, as the USDCAD traded at 1.0915. Initial support is likely found at 1.0902 and resistance at 1.0953. The loonie declined against its US counterpart Tuesday after Statistics Canada reported an unexpected decline in wholesale sales.

StatsCan will close out the week with a report on consumer price inflation. According to forecasts, consumer prices in April increased 2 percent year-on-year.

In US data, weekly jobless claims rose 28,000 to 326,000, faster than forecast. Continuing jobless claims edged lower from 2.666 million to 2.653 million.

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