Canadian retail sales grow sequentially in April, BoC likely to maintain gradual approach to rate normalization

Canadian retail sales grew slightly higher in April. Sales rose 0.6 percent sequentially, as compared with March’s upwardly revised gain of 0.5 percent. The rise was totally because of volumes, which grew 0.8 percent. Sales at motor vehicle and parts dealers rose 3 percent sequentially, making the largest contribution to the overall gain.

Stripping this category, the picture was weaker, as sales dropped 0.2 percent. In terms of other categories, notable gains were seen in clothing and accessories, general merchandise stores and furniture and home furnishing stores. Meanwhile, a great fall was seen at electronics and appliances stores while lower volumes led to falling sales at gasoline stations.

Province wise, sales rose in seven out of ten provinces, with gains concentrated in Quebec and Ontario. There were also comparatively large rises in New Brunswick, Manitoba and B.C. On the contrary, sales fell in Nova Scotia, Saskatchewan and PEI.

With a sound rise in volumes, the report released today painted a comparatively upbeat picture of retail activity in March. For the first quarter overall, volumes fell 1 percent, indicating to slower consumer spending. But, momentum rebounded as the quarter progressed which is a positive signal for near-term activity and underpins the view that growth rebounded to an above-trend rate in the second quarter, noted TD Economics in a research report.

Healthy labor markets and strong income rises should keep consumers spending at a decent clip in 2018, despite the negative effects of weaker housing market activity, rising interest rates and higher gasoline prices.

“While the tone of data has improved in recent months, we continue to expect the Bank of Canada to maintain a gradual approach to rate normalization in the face of continued domestic and external risks to the outlook, with the next hike anticipated in July”, added TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bearish at - 98.1709, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 160.332. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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