Canada retail sales rise in September, boosted by autos

Tue Nov 22, 2016 9:58am EST
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OTTAWA (Reuters) - Canadian retail sales picked up in September as auto purchases climbed for the first time in three months on demand for new cars, data from Statistics Canada showed on Tuesday, reinforcing expectations that economic growth rebounded in the third quarter.

Retail sales rose 0.6 percent, in line with economists' expectations, but would have been flat without the increased purchases of cars and parts.

Sales at motor vehicle and parts dealers led the way, rising 2.4 percent. Besides the increase in new car sales, Canadians paid more for gasoline.

Despite the large contribution from motor vehicle sales, the increased sales activity across multiple sectors was encouraging, said Robert Both, macro strategist at TD Securities.

Sales were up in seven of 11 sectors, accounting for 65 percent of retail trade. Retail volumes, which strip out the effects of price changes, were up 0.6 percent.

"The strong advance in retail volumes should provide a robust handoff to fourth quarter consumer spending," Both wrote.

Economists said the data pointed to a recovery in the broader economy in the third quarter after growth contracted in the previous quarter following massive wildfires in Alberta.

The retail figures offset some of the weakness in Monday's wholesale trade data and put the third quarter on track for 3.3 percent growth, said Doug Porter, chief economist at BMO Capital Markets. That is a tad ahead of the Bank of Canada's forecast for 3.2 percent.

Some analysts were unimpressed that consumers did not yet appear to be spending much of the benefit checks the government began mailing out in July to families with children as part of its effort to bolster the economy.   Continued...

Shoppers stroll "Europa Blvd." at the 5.3 million square foot (492,000 square metre) West Edmonton Mall in Edmonton, Alberta February 26, 2015.  REUTERS/Dan Riedlhuber