Canada August retail sales - A positive month in a choppy trend
Canadian retail sales with a 1.0% August increase are spot on the preliminary estimate, though the gain is more dependent on autos than consensus estimates, with ex auto sales up by a slightly less strong 0.7%. The preliminary estimate for September is for a 0.7% decline. With July having fallen by 0.7%, this suggests a subdued Q3 despite the August increase.
August sales also increased by 1.0% in volume terms. While auto sales were a positive this was more than offset by a decline in gasoline, with sales ex auto and gasoline up by 1.1%.
Areas of strength in the August breakdown include a 2.5% rise in general merchandise, a 3.2% rise in clothing and a 4.4% rise in electronics. Furniture was however weak with a 2.9% decline.
Canadian retail sales have been volatile recently with gains in April June and August but declines in May, July and probably September. Two positive months and one negative left a resilient Q2 despite weakness in GDP. Q3 is likely to see two negatives and one positive.
This is consistent with other signs of an economy with limited momentum but there is nothing conclusive in this data for next week’s Bank of Canada decision. We lean towards no change at that meeting though do not believe the BoC is done with easing.