Canadian retail sales fall sequentially in November on lower gasoline prices

Canada’s retail sales fell sequentially in November. Sales dropped 0.9 percent in the month, following the revised gain of 0.2 percent in October. Consensus expectations were for a fall of 0.6 percent. After accounting for price changes, volumes were still down a disappointing -0.4 percent.

Throughout the subsectors, performance was quite subdued, with sales falling in six categories out of 11. The headline fall was mainly due to lower gasoline prices and sub-par auto sales that led to a 5 percent fall in sales at gasoline stations and 1.8 percent fall in sales at motor vehicle and parts dealers. Stripping those volatile categories, nominal retail sales rose modestly by 0.2 percent.

In line with housing market weakness, sales fell again in furniture and home furnishing stores and in building materials and gardening equipment stores. E-commerce sales rose 20.1 percent year-on-year. Region wise, the fall was comparatively broad based, with sales falling in eight out of the ten provinces. Ontario and Quebec led the falls, whereas Alberta saw the first monthly rise after three months of declines. Performance through the Atlantic provinces was subdued, with sales falling in all four provinces.

Today’s release was slightly worse than anticipated. Combining today’s data and the manufacturing and wholesale trade data leaves the fourth quarter GDP tracking at 1.5 percent, roughly consistent with Bank of Canada expectations, said TD Economics in a research report.

Sound labor markets, going forward, should continue to underpin consumer spending. However, this might be offset by increasing borrowing and debt-servicing costs.

“November's retail sales data reinforces the moderating growth narrative, and reinforces the need for a shift away in real GDP growth from consumer spending to investment and exports to keep growth around its long-term trend”, added TD Economics.

At 15:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -176.84, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 19.0432 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex