The Canadian retail sales report released on Friday, showed a decline of 1.2% in October. National Bank of Canada’s analyst Kyle Dahms explains that October retail sales were like a lump of coal for the Canadian economy.
Key Quotes:
“In real terms, Canada’s retail sales fell 1.4% in October.”
“The Canadian retail results were much worse than expected. A significant portion of the miss stemmed from a drop in the sales of autos/parts. Historically, a substantial decay in the latter sector has been followed by a rebound in the following month. Higher than seasonal pump prices may have limited consumer spending as witnessed by discretionary sales dropping 1.9% in the month (however they remain positive on an annual basis).”
“October’s retail volumes were down 1.4% on a monthly basis which should translate into a negative contribution from retail spending to October GDP growth. Looking at the quarterly perspective, after mustering +1.2% annualized in the third quarter, retail sales are on track to decline in the last quarter of 2019 (after one month of data). This remains consistent with our view that consumers took a breather in Q4 after a solid Q3 and that GDP growth should have tapered to around 1%.”
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