Data released hours ago showed that Canadian retail sales declined 0.9% in November. The drop was larger-than-expected, and the report included negative revisions. Jocelyn Paquet, an economist at National Bank of Canada, points out that the Bank of Canada should not consider raising rates during the first half of the year.
Key Quotes:
“November’s poor retail numbers could hardly be described as a surprise considering the sharp drop in gasoline prices in the month and the weakness in auto sales. Still, the broad-based nature of the slump is a cause for concern. Sales did indeed retrace at gasoline stations and auto dealers, but they also dropped in 4 other categories, representing 37.5% of total outlays.”
“Retail volumes fell for the fifth time in the last six months, perhaps a sign that Canadian consumers may be negatively impacted by higher interest rates.“
“For the month of November, declining volumes could translate into a negative contribution to GDP, which is scheduled for release next Thursday.”
“With the price effect removed, retail sales slid 0.4% for a fifth retreat in the last 6 months.”
“The Bank of Canada should wait until at least the second half of the year before contemplating further rate hikes.”
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