Canadians shoppers prop up economy in Q4

Tue Jan 24, 2012 11:12am EST
 
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By Louise Egan

OTTAWA (Reuters) - Consumers look set to be the main drivers of Canada's economic growth after a report on Friday showed retail sales continued to surpass expectations in November and climb for the fourth straight month.

The rise in household spending is outpacing that of business investment and offsetting weak exports to sustain economic growth, as predicted by the Bank of Canada this month.

But analysts predict the trend may not last as a weakening jobs market may eventually undermine consumer confidence.

"More recently, the unemployment rate has been edging up, measures of consumer confidence are weak and wage gains have not been keeping pace with inflation," said Leslie Preston, economist at TD Economics.

"So, despite consumers' festive holiday spending in Q4 2011, we don't expect this pace to be sustained in 2012," she wrote in a note to clients.

Retail sales climbed 0.3 percent in November from October, Statistics Canada said, a notch above market expectations and buoyed by purchases of video games, gasoline, vehicles and clothing. Compared with November 2010, sales grew 3.1 percent.

In volume terms, sales rose 0.5 percent on a monthly basis.

In the inaugural release of a new data series, Statscan also said the national job vacancy rate averaged 1.7 percent in the three months ended in September 2011, unchanged from the previous three-month moving average (June-August). The rate reflects the proportion of overall positions that were unfilled in the period.   Continued...