Canada May retail sales leap 1.9 percent, should boost second-quarter growth

Tue Jul 23, 2013 10:50am EDT
 
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By David Ljunggren

OTTAWA (Reuters) - Canadian retail sales in May jumped by 1.9 percent from April to hit a record high, a clear sign that second-quarter growth could be significantly stronger than expected.

The advance - far greater than the 0.4 percent growth predicted by analysts - was the largest rise since the 2.8 percent month-on-month leap recorded in March 2010, Statistics Canada said on Tuesday.

Analysts said the strong numbers, driven in part by higher auto sales, meant annualized growth in the second quarter was set to eclipse the Bank of Canada's July 17 prediction of just 1 percent. First-quarter growth was 2.5 percent.

"As the U.S. struggles to hit 1 percent annualized second-quarter GDP growth, we think that this print means Canada could easily double or as much triple that growth rate," Derek Holt of Scotiabank Economics said in a note to clients.

Higher sales were reported in nine of the 11 subsectors, representing 94 percent of total retail trade. In volume terms, sales were also up 1.9 percent.

Retail sales hit a record C$40.42 billion ($39.24 billion) in May, up from the previous high of C$39.77 billion set in November 2012.

The data helped push the Canadian dollar to its highest against the U.S. dollar in more than a month. It strengthened to C$1.0298 versus the greenback, or 97.11 U.S. cents, up from Monday's North American session close at C$1.0344, or 96.67 U.S. cents.

The largest sales increase in dollar terms among all subsectors was a 4.3 percent gain at motor vehicle and parts dealers, reflecting higher sales of light trucks, as well as recreational vehicles, motorcycles and boats.   Continued...

 
An employee walks down rows of shelves at the new Target store in Guelph, Ontario, March 4, 2013, on the eve of the store's opening. The American retail giant is set to open its first three Canadian pilot stores on March 5. REUTERS/Geoff Robins