Rise in Canadian retail sales brightens economic outlook

Fri Apr 22, 2016 9:27am EDT
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By Leah Schnurr

OTTAWA (Reuters) - Canadian retail sales unexpectedly rose in February, the second consecutive monthly increase, brightening the outlook for an economy that is on track to rack up strong growth in the first quarter.

Separate data from Statistics Canada on Friday showed Canada's annual inflation rate dipped toward the lower end of the central bank's target range largely due to lower gasoline prices.

But economists were focused on the 0.4 percent rise in February's retail sales, which bested forecasts for a decline of 0.8 percent.

Sales volumes, which remove the effects of price changes, posted an even more robust 1.5 percent gain.

Recent data has suggested that Canada's economy slowed in February after a strong start to the year, but the retail sales report suggested the consumer sector was the exception.

Economists still expect relatively robust economic growth for the first three months of the year as the country bounces back from the slump in oil prices that triggered a mild recession last year.

"This is turning out to be a rather strong quarter for the consumer and a strong quarter overall for broad GDP growth," said Derek Holt, an economist at Scotiabank.

The Canadian dollar added to gains against the greenback immediately after the reports, while traders did not alter their expectations that the Bank of Canada is likely to keep interest rates unchanged for now. [CAD/] BOCWATCH   Continued...

People walk out of the going-out-of-business sale at Target Canada in Toronto February 5, 2015. REUTERS/Mark Blinch