Canada may be set for growth spurt after July retail bounce

Fri Sep 27, 2013 5:02am EDT
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By Louise Egan

OTTAWA (Reuters) - Canadian retail sales rose a solid 0.6 percent in July, making up for losses in June and setting up the economy to show firm growth in the month and in the third quarter after a recent rough patch.

Sales growth was pumped largely by gasoline stations, where both prices and volumes rose, according to a Statistics Canada report on Tuesday.

In volume terms, retail sales rose 0.5 percent in the month.

The July rebound matched the median forecast in a Reuters poll. Analysts had foreseen a bounce-back after sales slumped by 0.6 percent in June, hit partly by severe floods in Alberta and a two-week strike by construction workers in Quebec.

Canada's economy looks set to speed up after annualized growth slowed to 1.7 percent in the second quarter from 2.2 percent in the first, and gross domestic product in the month of June actually shrank 0.5 percent.

RBC Economics economist Nathan Janzen sees July GDP growth at a solid 0.7 percent.

"In turn, the strength in July GDP would be consistent with our expectation that GDP growth in the third quarter rebounded to a 3.4 (annualized) percent rate," he wrote in a note to clients.

Mazen Issa, an economist at TD Securities, sees third quarter growth of just below 2 percent.   Continued...

A clerk attends to a customer at a UPI energy gas station in Chatham, Ontario, in this April 11, 2008 file photo. REUTERS/Mark Blinch/Files