Low car sales depress Canada February retail trade
By Randall Palmer
OTTAWA (Reuters) - Disappointing car sales led to a surprise 0.2 percent fall in Canada's retail trade in February, the same month that the motor vehicle business had actually boosted wholesale trade, Statistics Canada said on Tuesday.
Making for an even less optimistic reading, the volume of sales, used in calculating real gross domestic product (GDP), slumped by 0.6 percent from January, while January's retail sales gain was revised down to 0.2 percent from 0.5 percent.
Excluding the auto sector, February sales were up 0.5 percent compared with a 0.8 percent fall in January, which was revised from a 0.5 percent fall. February sales at motor vehicle and parts dealers fell 2.4 percent, with new car sales down 2.8 percent, after a strong January.
Analysts surveyed by Reuters had expected no change in overall retail sales in February and a 0.4 percent rise excluding autos.
Wholesale trade data released on Monday had shown an unexpected 1.6 percent rise in February, largely due to motor vehicles. That had led analysts to suggest February GDP data, to be released on April 30, could be robust. But the retail data has forced market watchers to review their forecasts.
"Today's print helps provide a better sense of how the monthly industry level GDP print is shaping up. While this will take some shine off the GDP print, we still track that the economy expanded at a modest 0.1 percent month-on-month pace," Mazen Issa, Canada macro strategist for TD Securities, said in a note to clients.
"Provided that the economy expands at an above-trend pace this year (which we and the Bank of Canada expect), we still view this as consistent with a rate hike in the fall of this year."
Even so, the Canadian dollar slipped against its U.S. counterpart after the unexpectedly weak retail report. The currency dipped to C$0.9919 against the greenback, or $1.0082, from around C$0.9895 just before the report's release. Continued...