Canada’s retail sales drop sequentially in April

Canada’s retail sales fell sequentially in April, coming in significantly below consensus expectations. Retail sales dropped 1.2 percent, as compared to consensus expectations of a flat reading. The fall was even stronger in real terms, with volumes dropped 1.4 percent in the month.

The disappointing headline was mainly because of weaker sales at motor vehicles and parts dealers, which fell 4.3 percent after two months of solid sales. Stripping this category, the picture was slightly better, with sales remaining flat on the month. The market was expecting ex-auto sales to grow 0.7 percent.

Just a few categories recorded a rise in April. Sales rose at food and beverage stores, electronics and appliance stores and gasoline stations. In the meantime, sales of clothing & accessories dropped 1.3 percent sequentially and a slowing housing market weighed on sales of building materials & garden equipment as well as furniture & home furnishings.

Region wise, retail activity decelerated in six of ten provinces. The largest falls were seen in Quebec, New Brunswick and Ontario. Activity rose in Saskatchewan, Alberta, British Columbia and Nova Scotia.

Even if the retail spending has been on a weaker side this year, it is important to keep in mind that it is slowing from a usually solid rate seen last year, noted TD Economics in a research report.

“Even after today's decline, GDP growth in the second quarter is tracking 2.4 percent (annualized), with growth for the year as a whole expected to average 2 percent”, added TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -147.608, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -123.032. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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