Canadian retail sales grow above expectations in February, retail activity likely to weaken in Q1 as whole

Canadian retail sales grew above expectations in February. Sequentially, retail sales rose 0.8 percent, as compared with consensus expectations of a rise of 0.4 percent. This came on the heels of a disappointing January report, which recorded a revised drop of 0.4 percent in the month. After accounting for price changes, the picture was slightly less impressive, with volumes rising modestly by 0.2 percent, not sufficient to counter January’s revised fall.

Sectoral performance came in mixed with five subsectors out of 11 recording a rise. The uptick was mostly driven by a rise in sales at general merchandise stores and motor vehicles and parts dealers. Sales at gasoline stations also rose 1.9 percent, which was to be expected given rises in gasoline prices, noted TD Economics in a research report.

Lower sales at building material and garden equipment stores and electronics and appliance stores provided some offset. Region wise, seven provinces recorded rise in retail sales. Ontario and Quebec accounted for a large chunk of the headline rise. Alberta, Saskatchewan, and Manitoba also saw retail sales rise. Performance through the Atlantic provinces was mixed. British Columbia provided the most marked offset, with sales dropping 1.9 percent on the month.

“Retail activity for Q1 as a whole is likely to disappoint, and a large spending uptick would be needed in March to bring retail sales volumes for the overall quarter into positive territory. Looking ahead, the retail activity picture in Canada is likely to echo our expectations of subdued consumer spending, as past increases in borrowing costs continue to work their way into the system and partially offset gains from strong labour markets”, stated TD Economics.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 5.52092 while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 64.0487 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex