Commenting on this week’s retail sales data from Canada, National Bank of Canada analyst Jocelyn Paquet noted that increased spending at auto dealers and gasoline stations were the primary reason behind the upbeat data.
“On a less positive note, sales of electronics and appliances continued to contract and are now 3.6% below their level a year ago. The two other categories most closely associated with the housing market – furniture and building materials – were also showing year-on-year declines in sales, which suggests the current slowdown in the housing sector is affecting consumer spending.”
“Total retail volumes, meanwhile, advanced 0.2% in the second month of the year, a result which will go some way towards offsetting earlier-reported declines in manufacturing and provide some support to February GDP. That said, there were sharp downward revisions to January’s result (from +0.0% to -0.3%), which means that, even after February’s gains, Q1 real consumption retail volumes are on track to contract for second consecutive quarter. That said, given the resilience of the labour market, we continue to believe things should get better in the coming months.”