Nathan Janzen, senior economist at Royal Bank of Canada, notes that Canadian headline sales jumped 1.1% to build on a 1.0% increase in February, although the March gain was boosted by a price-led 6% increase in sales at gasoline stations.
“Even with an increase in March, retail sale volumes were down slightly in Q1 as a whole – consistent with prior expectations for another soft quarter for consumer spending growth. Job growth has been almost unbelievably strong, supporting overall household income growth despite wage gains that are still lackluster for this point in the economic cycle.”
“The intensification of the U.S.-China trade dispute has raised some grey clouds for the U.S. industrial sector and, by extension, Canada’s. But the removal of U.S. steel and aluminum tariffs on Canada, along with Canada’s retaliatory measures, will provide some offset. And the tick up in retail sale volumes in March follows earlier-reported bounce-backs in manufacturing sales and exports after likely weather-related drops in February.”
“The data on balance is still consistent with GDP growth coming in at a sub-1% rate in Q1 but better reports later in the quarter also still leave the odds on a bounce-back to a 2% rate in Q2.”