Canadian retail sales rise above expectations in November

Canadian retail sales rose 0.9 percent in the month of November after an upwardly revised 1.1 percent fall in the prior month. The November print came in above consensus expectations of a 0.6 percent rise and is the strongest print since March of last year. The picture was still positive after excluding price impacts, with retail sales volumes rose 0.7 percent.

Retail sales rose in six of the 11 major categories. Most of the rise was driven by increased sales at motor vehicles and parts dealers, which were led by higher sales at new car dealers. Excluding this category, retail sales rose modestly by 0.2 percent. Sales at building material and garden equipment and supplies dealers and food and beverages stores also came in decent.

Region wise, sales rose in six of the 10 provinces. Ontario led the overall rise, recording a rise of 1.6 percent. Sales also came in strong in Quebec and British Columbia at 1.4 percent and 1.1 percent, respectively.

“We still expect a tepid performance for the Canadian economy in the fourth quarter. Responses to the Bank of Canada's new Canadian Survey of Consumer Expectations provide some respite to the softness seen in the sector this year. Indeed, responses indicate that expectations for household spending growth have been edging higher throughout the year. This was likely driven by healthy labour markets, wage growth, and strengthening housing markets. That said, the sector will remain caught between these tailwinds and elevated debt-servicing costs”, said TD Economics in a research report.