MNI: Canada Feb Retails Rise After Jan Sees First Fall In 5M
Canadian flash retail sales increased in February after falling for the first time in five months in January, a decline that was distorted by cold weather and a petering out of pent-up demand for new cars.
While the February 0.1% gain didn't come with an industry breakdown, January's 0.3% fall was led by motor and parts dealers, which saw the first decline in five months after pent-up demand kept the sub-sector elevated. Excluding autos, sales were far stronger than the consensus for a 0.5% decrease, instead rising 0.5%.
The drop in the headline figure masks some underlying strength as sales were up in 6 of the 9 sub-sectors. After removing price changes, the volume of sales rose 0.2% in January. That measure is a closer indication of the contribution to gross domestic product.
The fall in January comes after a high-spending period in December where sales increased by 0.9%. The monthly figure was also impacted by record low temperatures in British Columbia, pulling retail sales in that province down 2.2%.
The report lines up with the Bank of Canada's view its rate hikes are working to open up some modest slack in the economy. Consumer spending may weaken as 2.2 million Canadians renew their mortgages at much higher interest rates in the next two years. At the same time, the retail figures suggest GDP may again beat the Bank's modest estimate in the first quarter.