Canada retail sales disappoint, GDP dip seen
By David Ljunggren
OTTAWA (Reuters) - Retail sales rose by much less than expected in January, adding to recent gloomy economic data that signals the economy may have contracted at the start of the year.
Retail sales increased by 0.5 percent in January and would have fallen had it not been for a healthy auto sector, according to Statistics Canada data on Thursday. This was much less than the 1.7 month-on-month rise that market operators had expected.
The data - which helped push the Canadian dollar down to a two-week low - follows figures that showed a 1.0 percent drop in wholesale trade in January and a 0.9 percent decrease in factory sales.
"Outside of the spirited gain in auto sales (a pace which cannot last long), Canadian retail sales continue to lose momentum. High household debt levels and weak employment growth suggest this trend will persist through early 2012," said Benjamin Reitzes of BMO Capital Markets Economics.
"With the final piece of January's GDP puzzle in place ... it looks as though the Canadian economy contracted slightly to start the year."
Sales at motor-vehicle and parts dealers were up by 3.7 percent, thanks to a 4.6 percent rise in sales at new car dealers. Excluding the autos subsector, retail sales declined by 0.5 percent in January.
The Canadian dollar slipped to break even with the U.S. dollar at $1.000, its lowest level since March 7. It was at C$0.9974 versus the U.S. dollar, or $1.0026, immediately before the release.
Statscan reported gains in just five of the 11 subsectors it tracks, representing 52 percent of total retail sales. In volume terms, sales grew by 0.3 percent. Continued...